                                                                                                          ACCEPTED
                                                                                                      05-15-01292-CV
                                     05-15-01292-CV                                        FIFTH COURT OF APPEALS
                                                                                                      DALLAS, TEXAS
                                                                                                10/23/2015 7:38:11 PM
                                                                                                           LISA MATZ
                                                                                                               CLERK




                             No.
                                                                             FILED IN
                                                                      5th COURT OF APPEALS
                                                                           DALLAS, TEXAS
                                         In the                       10/23/2015 7:38:11 PM
                            FIFTH COURT OF APPEALS            OF TEXAS       LISA MATZ
                                                                               Clerk


                      In re Giant Eagle, Inc.,

                                                                      Relator.


                         On Petition for Writ of Mandamus from the
                     68th Judicial District Court of Dallas County, Texas


                                   INDEX TO THE RECORD


TO THE HONORABLE COURT OF APPEALS FOR THE FIFTH DISTRICT OF TEXAS:

         Pursuant to Texas Rule of Appellate Procedure 52.7, Relator Giant Eagle, Inc. submits

this Index to the Record containing (1) a certified or sworn copy of every document that is

material to Relator’s claim for relieve and that was filed in any underlying proceeding; and (2) a

properly authenticated transcript of any relevant testimony from any underlying proceeding,

including any exhibits offered in evidence.




A0964036.1
                                                                                   RECORD
  TAB                           DESCRIPTION                            DATE         PAGE
                                                                                   NUMBER
   A.        First Amended Petition                                   6/25/2015     R001

   B.        Defendant Giant Eagle’s Motion to Dismiss for
             Collateral Estoppel or In the Alternative, Pursuant to   7/15/2015     R030
             the Governing Forum Selection Clause

   C.        Plaintiff’s Response to Defendant Giant Eagle, Inc.’s
                                                                      8/14/2015     R179
             Motion to Dismiss

   D.        Plaintiff’s Supplemental Brief in Opposition to Giant
                                                                      8/17/2015     R226
             Eagle’s Motion to Dismiss

   E.        Defendant Giant Eagle’s Reply in Support of Its
             Motion to Dismiss for Collateral Estoppel or, In the
                                                                      8/19/2015     R286
             Alternative, Pursuant to the Governing Forum
             Selection Cause

   F.        PowerPoint Presentation used by Plaintiff’s Counsel at
             Argument on 8/24/2015 – Response to Giant Eagle’s        8/24/2015     R305
             Motion to Dismiss

   G.        Plaintiff's Letter Brief to Court providing cases in
             which Texas courts construed the "arise out of" to       8/25/2015     R325
             exclude the particular claims at issue

   H.        Giant Eagle’s Letter Brief in Support of Motion to
                                                                      8/25/2015     R369
             Dismiss

   I.        Giant Eagle’s Motion to Strike Plaintiff’s
             Supplemental Brief in Opposition to Giant Eagle’s        8/25/2015     R462
             Motion to Dismiss

   J.        Order Denying Defendant Giant Eagle Inc.’s Motion
             to Dismiss for Collateral Estoppel or, In the
                                                                      9/22/2015     R509
             Alternative, Pursuant to the Governing Forum
             Selection Clause

   K.        Giant Eagle’s Motion to Stay All Proceedings, Aside
             from Outstanding Motions, Pending Resolution of Its
                                                                      10/6/2015     R510
             Forthcoming Petition for Writ of Mandamus &
             Proposed Order

   L.        Plaintiff’s Response to Defendant Giant Eagle, Inc.’s
                                                                      10/14/2015    R516
             Motion to Stay All Proceedings


A0964036.1
   M.        Order Denying Defendant Giant Eagle, Inc.’s Motion
             to Stay All Proceedings, Aside from Outstanding
                                                                   10/19/2015   R534
             Motions, Pending Resolution of Its Forthcoming
             Petition for Writ of Mandamus

   N.        Defendants Giant Eagle Inc., David Shapira, and
             Daniel Shapira’s Response to Plaintiff’s [Proposed]   9/18/2015    R535
             Level Three Scheduling Order




A0964036.1
Dated: October 23, 2015   Respectfully Submitted:


                          /s/ Orrin L. Harrison III
                          Orrin L. Harrison III
                             Bar No. 09130700
                             oharrison@ghetrial.com
                          Hayley Ellison
                             Bar No. 24074175
                             hellison@ghetrial.com
                          GRUBER HURST ELROD
                            JOHANSEN HAIL SHANK, LLP
                          1445 Ross Avenue, Suite 2500
                          Dallas, TX 75202
                          Telephone: 214-855-6828
                          Fax: 214-855-6808

                                    -and-

                          Bernard Marcus
                            marcus@marcus-shapira.com
                          Scott Livingston
                            livingston@marcus-shapira.com
                          Jonathan Marcus
                           jmarcus@marcus-shapira.com
                          Daniel J. Stuart
                            stuart@marcus-shapira.com
                          MARCUS & SHAPIRA LLP
                          301 Grant Street, 35th Floor
                          One Oxford Centre
                          Pittsburgh, Pennsylvania 15219-6401
                          Telephone: 412-338-5200
                          Fax: 412-391-8758

                          Counsel for Giant Eagle, Inc., David
                          Shapira, and Daniel Shapira




A0964036.1
                             CERTIFICATE OF SERVICE

       The undersigned certifies that a copy of the foregoing Record was served upon the
attorneys of record in the above cause in accordance with the Texas Rules of Appellate
Procedure, on October 23, 2015.


                                        /s/ Hayley Ellison
                                        Hayley Ellison




A0964036.1
Tab A
                                     CAUSE NO. DC-15-03853


 DICKSON PERRY, derivatively on §                                     IN THE DISTRICT COURT
 behalf           of  EXCENTUS §
 CORPORATION,                   §
                                §
        Plaintiff,              §
                                §
 v.                             §                                     68TH JUDICIAL DISTRICT
                                §
 EXCENTUS CORPORATION,          §
 BRANDON LOGSDON, JIM MILLS, §
 GIANT EAGLE, INC., DAVID       §
 SHAPIRA, DANIEL SHAPIRA,       §
 AUTO-GAS SYSTEMS, INC., RANDY §
 NICHOLSON, AND ADS ALLIANCE                                                    DALLAS COUNTY
 DATA SYSTEMS, INC.

           Defendants.

                                  FIRST AMENDED PETITION


         Plaintiff Dickson Perry, derivatively on behalf of Excentus Corporation (“Excentus”),

files his First Amended Petition against Excentus Corporation, Brandon Logsdon (“Logsdon”),

Jim Mills (“Mills”), Giant Eagle, Inc. (“Giant Eagle”), Daniel Shapira, David Shapira, Auto-Gas

Systems, Inc. (“Auto-Gas”), Randy Nicholson, and Alliance Data Systems, Inc. (“ADS”)

(collectively, “Defendants”), and hereby alleges as follows:

                                         I.   SUMMARY

         Dickson Perry, founder and shareholder of Excentus Corporation, sues derivatively on

behalf of Excentus certain of its officers, directors, and shareholders for breach of fiduciary duty,

fraud, and civil conspiracy. His claims stem from the decision by a cadre of self-dealing

directors and officers, and the shareholders that aided and abetted them, to pay themselves off at

Excentus’ expense.



FIRST AMENDED PETITION                                                                        Page 1
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                                                                                                 R001
         Mr. Perry founded Excentus in 1996, and over the next eighteen years he led the

company as its Chairman and CEO from nothing to becoming a 200-employee, multi-million

dollar growth company and the undisputed leader in the fuel and grocery cross-marketing

programs market. But on the evening of July 31, 2014, Defendants – a cadre of shareholders

holding a little over half of Excentus’ shares, along with the Defendant officers and directors –

met in secret to oust Mr. Perry from Excentus. The following day, these officers and directors

removed Mr. Perry from every position he held in Excentus without providing a reason; they

fired his daughter and two of his friends from the company without cause; they cut off his

cellular phone; they cut-off his health benefits; they towed his car from the company lot; and

they even cancelled his national fuel rewards card, a program which Mr. Perry had himself

envisioned and created.

         Defendants immediately began reaping the fruits of their illicit conspiracy. With Mr.

Perry out of the way, the officer Defendants paid themselves hundreds of thousands of dollars in

bonus payments that Mr. Perry had previously opposed; the director Defendants usurped a

corporate opportunity of Excentus that Mr. Perry had painstakingly negotiated; and the

shareholder Defendants settled litigation that Excentus, with Mr. Perry at the helm, had initiated

against them with a near total capitulation of Excentus’ rights and interests. With stunning

impunity, and while sitting as directors of the company, Nicholson, Logsdon, and the Shapiras

even caused Excentus to pay the Shapiras hundreds of thousands of dollars and to award Giant

Eagle rights it never had.

         Mr. Perry brings this derivative action on behalf of a company that represents his life’s

work. He seeks to restore to it the right to conduct its business without the subversion of self-

serving directors, officers, and shareholders who are intent on plundering Excentus’ valuable



FIRST AMENDED PETITION                                                                      Page 2
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                                                                                              R002
assets for their own respective exploitation. Accordingly, he requests an award of damages to

Excentus for the harms committed by Defendants, as well as injunctive relief to stop and remove

the corrupt cadre presently running, and potentially ruining, Excentus.



                                           II. DISCOVERY

         1.          Discovery shall be conducted pursuant to Texas Rule of Civil Procedure 190.4.

                                             III. PARTIES

         2.          Plaintiff Dickson Perry is an individual who is a citizen of the State of Texas.

Excentus Corporation is a corporation organized and existing under the laws of the State of

Texas. Its principal place of business is in Dallas County, Texas.

         3.          Defendant Brandon Logsdon is an individual who is a citizen of the State of

Texas. He may be served with process at his principal place of business, located at 14241 Dallas

Parkway, Suite 1200, Dallas, TX 75254. Defendant Logsdon was served with process and has

appeared in this action.

         4.          Defendant Jim Mills is an individual who is a citizen of the State of Texas. He

may be served with process at his principal place of business, located at 14241 Dallas Parkway,

Suite 1200, Dallas, TX 75254. Defendant Mills was served with process and has appeared in

this action.

         5.          Defendant Randy Nicholson is an individual who is a citizen of the State of

Texas. He may be served with process at his principal place of business, either at 1202 Estates

Drive, Suite D, Abilene, TX 79602 or at 14241 Dallas Parkway, Suite 1200, Dallas, TX 75254.

Defendant Nicholson was served with process and has appeared in this action.




FIRST AMENDED PETITION                                                                         Page 3
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                                                                                                 R003
         6.          Defendant Giant Eagle, Inc. is a corporation organized and existing under the

laws of the State of Pennsylvania that conducts business in the State of Texas. It may be served

with process at its principal place of business, located at 101 Kappa Drive, Pittsburgh, PA 15238.

Defendant Giant Eagle, Inc. may also be served with process by serving the Texas Secretary of

State. Defendant Giant Eagle was served with process and has appeared in this action.

         7.          Defendant David Shapira is a citizen and resident of the State of Pennsylvania, a

Director of Excentus Corporation, and Executive Chairman of the Board of Directors of Giant

Eagle. David Shapira can be served c/o Giant Eagle, Inc., 101 Kappa Drive, Pittsburgh, PA

15238.        Defendant David Shapira may also be served with process by serving the Texas

Secretary of State.

         8.          Defendant Daniel Shapira is a citizen and resident of the State of Pennsylvania, a

Director of Excentus Corporation, and an owner and/or director of Giant Eagle. Daniel Shapira

can be served at Marcus & Shapira LLP, One Oxford Center, 35th Floor, 301 Grant Street,

Pittsburgh, PA 15219. Defendant Daniel Shapira may also be served with process by serving the

Texas Secretary of State.

         9.          Defendant Auto-Gas Systems, Inc. (“Auto-Gas”) is a corporation organized and

existing under the laws of the State of Delaware and with its principal place of business in

Abilene, Texas. It may be served with process by serving its Texas registered agent Jeffrey F.

Upp, 1202 Estates Drive, Suite D, Abilene, TX 79602. Defendant Auto-Gas was served with

process and has appeared in this action.

         10.         Defendant ADS Alliance Data Systems, Inc. is a corporation organized under the

laws of the State of Delaware with its principal place of business in Gahanna, Ohio, that

conducts business in the State of Texas. It may be served with process by serving its Texas



FIRST AMENDED PETITION                                                                          Page 4
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                                                                                                   R004
registered agent CT Corporation System, 1999 Bryan St. Suite 900, Dallas, TX 75201.

Defendant ADS Alliance Data Systems, Inc. was served with process and has appeared in this

action.

          11.        Defendant Excentus Corporation (“Excentus”) is a corporation organized and

existing under the laws of the State of Texas. It may be served with process at its principal place

of business, 14241 Dallas Parkway, Suite 1200, Dallas, TX 75254.



                                    IV. JURISDICTION & VENUE

          12.        This Court has jurisdiction over this matter. Defendants either reside in the State

of Texas or transact substantial business in the State of Texas.

          13.        Defendants David and Daniel Shapira transact substantial business in the State of

Texas. Since approximately 2004 and 2006, Defendants David and Daniel Shapira, respectively,

have served on the Board of Directors of Excentus, a Texas corporation. As Board members, the

Shapiras have participated, both in person and via telephone, in over a dozen Excentus Board

and shareholder meetings and actions, and on information and belief continue to participate in

such meetings and actions today. Further, the Shapiras have participated in the Board and

shareholder meetings in which the tortious acts described below took place, including without

limitation the July 31, 2014 shareholder meeting and the Board meeting held on the following

day. They have also executed written consents and agreements pertaining to the business of

Excentus and executed pursuant to Texas law. They have regularly communicated – in person,

via telephone, and via email – with Excentus representatives in Texas about matters pertaining to

Excentus. The Shapiras have also, on behalf of Giant Eagle, negotiated agreements with Texas

entities and persons both in person in Texas as well as via email and telephone. Additionally, the



FIRST AMENDED PETITION                                                                           Page 5
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                                                                                                   R005
Shapiras have been members of committees formed by Excentus, including without limitation its

Compensation Committee and Audit Committee, and as members have also participated in the

meetings of such committees.

         14.         Venue is proper in Dallas County pursuant to TEX. CIV. PRAC. & REM.

CODE § 15.002(a)(1) because a substantial part of the events or omissions giving rise to the

claim occurred in Dallas County, Texas.

                                              V. FACTS

A.       Mr. Perry Founds and Positions Excentus as an Undisputed Market Leader.

         15.         Mr. Perry founded Dallas-based Excentus Corporation (“Excentus”) in 1996. He

served as its first and sole investor, shareholder, and employee. For its first eight years of

existence, Mr. Perry funded the company almost exclusively with his own resources.

         16.         Mr. Perry envisioned Excentus creating integrated fuel marketing programs that

would allow consumers to save money on gas and at the same time allow retailers, such as

grocery and convenience stores, to increase their sales. He foresaw Excentus providing the

technology, services, and programs to grocery and convenience stores necessary to implement

these fuel cross-marketing programs. His vision included Excentus eventually launching a

national coalition of fuel cross-marketing programs for its customers and consumers.            To

accomplish these goals, Excentus would have to develop the next generation of proprietary pay-

at-the-pump technology and related innovations so that consumers could receive loyalty rewards

in the form of fuel discounts when making certain purchases and then redeem their rewards to

save money when buying gas.

         17.         Mr. Perry’s vision has become a valuable reality for Excentus. In the eighteen

years since its founding, Excentus has led the creation and growth of fuel cross-marketing



FIRST AMENDED PETITION                                                                       Page 6
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                                                                                               R006
programs from a novel idea into a multi-billion dollar market. Today, nearly all major oil

companies – including Shell, Exxon Mobil, and Chevron – and grocery stores – such as Safeway,

Tom Thumb, Kroger, and Wal-Mart – are leveraging Excentus’ technology, services, trade

secrets, patents and programs. Excentus has helped these companies promote billions of dollars

in sales by providing the technology and services necessary to create customer loyalty programs.

These programs have also saved consumers over $2 billion dollars on fuel to date.

         18.         Mr. Perry made Excentus his life’s work.      He put every ounce of his

entrepreneurial skills, experience, efforts and passion into its creation and success. Through his

hard work and leadership, Excentus has acquired an extensive patent portfolio; developed

valuable patent-protected technology and marketing programs; hired and nurtured over 200

employees; achieved double-digit, compounded annual revenue growth; negotiated a multitude

of major commercial agreements with important market players; accumulated tens of millions

dollars of cash to support its current business operations and future growth plans; and yielded

tens of millions dollars in shareholder equity.

B.       Excentus Brings on Investors.

         19.         Due to its growing success, Excentus began drawing the attention of various

businesses in the fuel rewards market. Beginning in 2004, Mr. Perry and the other shareholders

agreed to take on certain companies who had expressed an interest in becoming strategic

investors in Excentus. In addition to their capital contributions, these particular companies

entered into commercial agreements with, and promised to bring strategic business opportunities

to, Excentus. These investors included Defendants Giant Eagle, ADS, and Auto-Gas.




FIRST AMENDED PETITION                                                                     Page 7
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                                                                                              R007
         1.        Giant Eagle

         20.         Pittsburgh-based Giant Eagle was the first such major investor. Giant Eagle

operates over 400 grocery stores and convenience stores, primarily in Pennsylvania and Ohio. It

is one of the forty largest privately-held and family operated companies in the U.S., and it is

owned by, among others, Defendants David and Daniel Shapira. David Shapira has served as its

principal executive leader for many years, while Daniel Shapira has provided legal

representation to Giant Eagle through his law firm, Marcus & Shapira.

         21.          Prior to learning about Excentus, Giant Eagle had unsuccessfully sought to

create its own fuel and grocery cross-marketing program to generate loyalty from, and increased

sales to, its customers. But Giant Eagle lacked the technology and know-how to integrate and

implement such a program on its own. It therefore recognized the value of Excentus, which at

the time was already assisting other grocery store companies develop, integrate, and launch fuel

cross-marketing programs.         As a result, in 2002 Giant Eagle and Excentus entered into a

Software License and General Services Agreement. Pursuant to that agreement, Excentus

provided Giant Eagle with the technology, services and know-how necessary for Giant Eagle to

launch its fuel cross-marketing program “fuelperks!”            Without Excentus’ technology and

services, Giant Eagle could not have launched or maintained fuelperks!, which became one of its

most profitable programs.

         22.         Two years later, after launching their fuelperks! program and after listening to

Mr. Perry describe his vision for Excentus, Defendant David Shapira asked to invest in Excentus,

but that investment came with certain strings. First, Giant Eagle wanted a controlling interest in

Excentus. Second, Giant Eagle wanted the right to consent to various major corporate decisions




FIRST AMENDED PETITION                                                                         Page 8
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                                                                                                 R008
of Excentus. Third, Giant Eagle wanted to reconstitute Excentus’ Board so as to ensure Giant

Eagle could fill it with its own representatives.

         23.         Mr. Perry did not agree to the first two demands. Instead, Excentus allowed

Giant Eagle to have consent rights only for a limited time. Giant Eagle nonetheless invested.

With respect to the third, Excentus allowed Giant Eagle to appoint a single director. And one

year after Giant Eagle’s initial investment, Giant Eagle again offered to purchase additional

shares. Mr. Perry and the other shareholders agreed to let Giant Eagle appoint a second board

members to Excentus’ board of directors in exchange for that second investment. Giant Eagle

appointed David and Daniel Shapira.

         2.       ADS

         24.         Excentus’ success also attracted the interest of ADS, a leader in credit card and

payment processing services for retailers. In particular, ADS coveted Excentus’ relationship

with Giant Eagle and other grocery store chains across the U.S. These grocery store chains were

potential customers for ADS, and Excentus offered ADS a way into a market it had faced

difficulty penetrating.

         25.         In addition to its payment card business, ADS also owned the AirMiles program,

a profitable cross-marketing marketing program in Canada.             ADS therefore understood the

potential and value of Excentus' plans for a national fuel cross-marketing program. They were

also keenly aware of the success Giant Eagle and other Excentus customers were having with

fuel cross-marketing developed by Excentus.

         26.         Around 2007, Excentus and ADS negotiated and executed a stock purchase

agreement. Giant Eagle and the Shapiras strongly supported this new relationship with ADS, as

it more than doubled the value of Giant Eagle's interest in Excentus in just two years.



FIRST AMENDED PETITION                                                                         Page 9
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                                                                                                  R009
         3.        Auto-Gas

         27.         While negotiating and closing Excentus’ agreements with ADS, Mr. Perry had

also begun discussions with Defendant Randy Nicholson, the founder and principal executive of

Defendant Auto-Gas. Since the founding of Excentus, Auto-Gas had been a competitor of

Excentus.        Nicholson and Auto-Gas had applied for and received several patents that held

potential value for Excentus and its future plans. Nicholson and Auto-Gas, however, had been

unable to capitalize on these patents or compete against Excentus. By 2008, Auto-Gas had

become primarily a holding company for these patents, neglecting even to enforce them.

         28.         In 2008, Mr. Perry negotiated the purchase of Auto-Gas’s patent portfolio. In

exchange, Auto-Gas became one of Excentus’ largest shareholders, along with Mr. Perry, Giant

Eagle and ADS.

         29.         Nicholson had additional demands, however. Faced with the prospect of having

no income, he demanded a position on Excentus’ Board of Directors, as well $300,000 for him

and his son-in-law Jeff Upp per year for five years in exchange for a non-compete agreement.

Excentus knew it was competing against others to acquire these patents, so in an effort to

appease Nicholson and close the deal, Excentus agreed.

C.       Defendants Pursue a Self-Serving Agenda.

         30.         What Mr. Perry, along with the other Excentus directors and shareholders,

initially identified as opportunities for growth via collaboration with its new "strategic" investors

instead devolved into a race by these Defendants to subserve Excentus’ best interests to their

respective aims. What follows is a description of how each of the Defendants’ personal agenda

led them to ultimately conspire against and harm Excentus.




FIRST AMENDED PETITION                                                                       Page 10
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                                                                                                R010
         1.        Giant Eagle and the Shapiras

         31.         The Shapiras were not on Excentus’ board to loyally serve Excentus’ best

interests. Instead, they worked tirelessly to benefit and protect Giant Eagle. And when they

could no longer subserve Excentus’ interests to those of Giant Eagle, they conspired with

Defendants to terminate Mr. Perry and reap their illicit rewards.

         32.         As mentioned above, Giant Eagle needed Excentus’ technology to successfully

implement and operate its fuelperks! cross-marketing program.          While Excentus expected

compensation for the use of its technology, for some time, it relied on Giant Eagle and the

Shapiras’ promises that the two would enter into a trademark licensing agreement for fuelperks!

and that Giant Eagle would also agree to have its program participate in Excentus’ anticipated

national fuel cross-marketing coalition. Excentus anticipated that the fuelperks! brand would

become only one of many participating programs in Excentus’ future national coalition. But

while Giant Eagle eventually did enter into a license agreement so that Excentus had the right –

but not the obligation – to use fuelperks! as part of its programs, the Shapiras never allowed

Giant Eagle to become a member of Excentus’ national coalition. They instead wanted their own

program – fuelperks! – to be the single program promoted by Excentus, even though Excentus

had no obligation to do so and instead had the opportunity to develop a much broader and more

promising national coalition.

         33.         In March of 2012, the Shapiras’ true loyalties were on display. Mr. Perry

announced at one of Excentus’ board meetings that Excentus would finally launch its national

cross-marketing program, which was to be called the Fuel Rewards Network. This was due in

part to a major new agreement between Excentus and Shell Corporation for national redemption

coverage at Shell fuel stations, and it represented a monumental step for Excentus towards



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                                                                                            R011
enacting Mr. Perry’s vision. Excentus would be able to engage untold partners across the

country to participate in its Fuel Rewards Network, including, as only one among many, Giant

Eagle’s fuelperks! program. But since Excentus would not exclusively be using the fuelperks!

brand (which Excentus had no obligation to do, and the brand had not agreed to participate in the

national program anyway), the Shapiras were furious. To them, this announcement did not mean

more profits for Excentus; instead, they saw it as more competition against, and thus less profits

for, Giant Eagle. Giant Eagle was a competitor of Shell, and the Shapiras had not allowed Giant

Eagle to add the fuelperks! brand to the Fuel Rewards Network. They wanted only their brand

promoted by Excentus. Following the announcement, the Shapiras began shouting angry threats

to sue Excentus and all of its individual board members.             Importantly, they also began

advocating that Mr. Perry be terminated.

         34.         Following this meeting, Mr. Perry continued exploring ways to resolve Giant

Eagle’s disputes. After consulting with Excentus’ counsel, Mr. Perry offered that Giant Eagle

could still join the Fuel Rewards Network (as originally discussed) or alternatively license

Excentus’ technology for Giant Eagle’s use with their own fuelperks! program. But the Shapiras

(despite serving as Excentus directors) and Giant Eagle refused.     Indeed, David Shapira went so

far as to state that prior to their dispute, he was willing to have Giant Eagle pay Excentus for use

of Excentus’ technology. But now he was not going to allow Giant Eagle to pay Excentus one

[expletive] penny.

         35.         Seeing no other options, Mr. Perry consulted with legal counsel at Fulbright &

Jaworski, LLP (now Norton Rose Fulbright), and in accordance with their advice, on December

2, 2012, Excentus filed breach of fiduciary duty, unfair competition, and patent infringement

claims against Giant Eagle and the Shapiras. Norton Rose Fulbright also advised Excentus to



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                                                                                               R012
hold a board meeting to decide how to conduct the litigation while two self-dealing directors

continued serving on the Board. Following their advice, Excentus’ Board voted to create an

Executive Committee (which would exclude the Shapiras) to manage Excentus’ business affairs,

as well as a Litigation Committee to manage the litigation free from the self-serving misconduct

of the Shapiras. Defendants Nicholson, Logsdon, and Mills all either voted or expressed their

support for these measures at the time.

         36.         In the lawsuit filed by Norton Rose Fulbright, Excentus alleged that “Giant

Eagle has embarked on a course of action to disrupt and gain control of Excentus through breach

of fiduciary duties owed by the Shapiras to Excentus.” Excentus further alleged that “the

Shapiras have placed Giant Eagle’s interests ahead of Excentus’ interests. . . . [W]henever there

was a choice to do what was best for Excentus and what was best for Giant Eagle, the Shapiras

have consistently chosen to place Giant Eagle’s interests ahead of Excentus’ interests.”

         37.         Both the Shapiras and Giant Eagle zealously contested Excentus’ allegations, but

two federal courts disagreed. The Shapiras moved to dismiss the claims against themselves as

directors, but in 2014, a federal court in Pennsylvania denied their motion to dismiss the claim

that the Shapiras had breached the duties they owed to Excentus by causing Giant Eagle not to

pay royalties for the use of the Excentus patents.

         38.         A Texas federal court also denied a Giant Eagle motion for preliminary

injunctive relief that sought to stop Excentus from exercising an option to buy ADS’s shares

back from ADS (as described in greater detail below). Of particular relevance to this lawsuit

was that federal court’s ruling that Giant Eagle no longer held certain rights to consent to all of

Excentus’ share purchases. As part of Giant Eagle’s preliminary injunction requests, Giant

Eagle argued that Giant Eagle had the right to approve Excentus’ exercise of its option to buy



FIRST AMENDED PETITION                                                                        Page 13
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                                                                                                 R013
back all of ADS’ shares. The federal court disagreed, however, explaining that any such consent

rights had expired. Giant Eagle had lost. Unable to achieve their aims legally, they resorted to

illicit, extra-judicial means.

         2.        ADS

         39.         ADS also developed an agenda that would ultimately incentivize it to conspire

with Giant Eagle, the Shapiras, and the remaining Defendants to oust Mr. Perry.

         40.         The original relationship between ADS and Excentus was no longer a profitable

one for Excentus. When ADS invested in Excentus, the two had entered into a Joint Marketing

Agreement pursuant to which they would jointly offer a private label payment card that grocery

store chains could provide to their customers. Giant Eagle had committed to being a first, test

customer for the offering.         However, shortly after the execution of the Joint Marketing

Agreement, Giant Eagle and ADS wound up working together and excluding Excentus entirely

from the project. Excentus’ relationship with ADS quickly became a dormant one.

         41.         As a result, Mr. Perry began exploring Excentus’ options with respect to ADS.

Following a general agreement in principle to unwind the relationship between ADS and

Excentus, he delegated negotiations to Logsdon, whom he had promoted to Chief Operating

Officer.

         42.         But the calculus for ADS soon changed. Around that same time, Excentus

executed with MasterCard an agreement to launch a co-branded MasterCard for the Fuel

Rewards Network. This represented a lucrative opportunity to ADS to become the issuer of the

card, and Logsdon came to Mr. Perry with a request from ADS to become the issuer. Mr. Perry

agreed, but only if any agreement with ADS also included an option for Excentus to buy back all

of the Excentus shares that ADS had purchased. Logsdon said ADS would agree, but that it had



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                                                                                              R014
one additional (and, in retrospect, highly suspect) request: ADS wanted to be indemnified if

Giant Eagle opposed the option.

         43.         As noted above, Giant Eagle did in fact oppose the exercise of the option, but it

failed to do so successfully. Thus, with Excentus having the right to exercise the option and buy

back all ADS shares, ADS was faced with the prospect of being bought out of Excentus at the

same time that highly lucrative opportunities were materializing – Excentus’ co-branded

MasterCard for the Fuel Rewards Network, among others.

         3.        Auto-Gas

         44.          Soon after Excentus acquired the patent portfolio from Auto-Gas, Mr. Perry

embarked on an aggressive and wildly successful patent enforcement effort. Mr. Perry achieved

tens of millions of dollars in settlements for Excentus, something that Nicholson had never been

able to achieve for Auto-Gas.

         45.         Following such success, Nicholson and Upp began asking about the money

Excentus was paying Auto-Gas.            Their $300,000 per year payments were set to expire in

September 2013, and Nicholson made clear to Mr. Perry that he was in desperate need for

additional cash and income.         He wanted his non-compete renewed, but Mr. Perry could not

agree to have Excentus pay additional consideration for essentially no value in return. The best

that Excentus could do was pay Nicholson some consulting fees for assisting in Mr. Perry’s

patent enforcement efforts. But this turned out not to be enough to meet Nicholson’s cash needs.

         4.        Logsdon and Mills

         46.       As part of his effort to develop the next crop of Excentus leaders, Mr. Perry had

promoted Logsdon to President and Chief Operating Officer and Mills to Executive Vice

President and Chief Administrative Officer.            In effect, Mr. Perry delegated to Logsdon



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                                                                                                  R015
responsibility for the day-to-day operations and growth of both the Fuel Rewards Network and of

Centego (an Excentus subsidiary that held Excentus’ patents). This would allow Mr. Perry to

focus on Excentus’ aggressive patent enforcement plans (which at that point included its largest

enforcement action to date against one of the largest grocery store chains in the country), as well

as resolving corporate issues with Giant Eagle, ADS and Auto-Gas.

         47.       In late 2013, and following a sizeable settlement payment to Excentus for the use

of its patents, Mr. Perry began to look more closely into Logsdon and Mills’ performance. In

early 2014, when Logsdon and Mills presented the company's 2013 operating results and their

proposed 2014 operating plan and budget, Mr. Perry became increasingly concerned. Growth in

both Excentus’ Fuel Rewards Network and in other aspects of the business was lagging

significantly behind Logsdon and Mills’ previous projections and expenses were soaring,

particularly personnel costs, far outpacing relative revenue and gross profit growth.

         48.       It also became very apparent that none of the major agreements Logsdon had

negotiated for the Fuel Rewards Network were performing as had been promised by Logsdon

and his team. Key customers of Excentus, such as MasterCard and Shell, had begun voicing

their concerns to Mr. Perry regarding Excentus’ ability to deliver on its commitments under the

agreements Logsdon had negotiated with them. One even demanded Mr. Perry re-negotiate their

agreement under the threat that they may exercise their right to terminate their agreement.

         49.       Even more troubling, it appeared to Mr. Perry that Logsdon and Mills were

improperly accounting for revenues from one major partner so as to inflate Excentus’

performance and cover up their shortcomings. Worse yet, their 2014 operating plan and budget

did not appear to adequately address the issues with Logsdon’s performance and yet it included

sizeable proposed bonuses to Logsdon and his team. These proposed bonus payments were



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                                                                                                 R016
completely out of line with the actual performance of the business, including the performance of

both Logsdon and certain of his subordinates.

         50.       Mr. Perry made it clear that Logsdon - as President and COO - along with rest of

the senior management term were going to be held specifically accountable for the necessary

improvements. Mr. Perry also informed Logsdon that he would only approve partial payment of

some of the bonus amounts Logsdon had proposed. The other portions would be deferred for

possible payment later in the year, pending expected improvements. Logsdon was not happy

with Mr. Perry’s decisions.

         51.       Mr. Perry then communicated his concerns regarding the performance of Logsdon

and his senior management team to Mills, who was responsible for all HR and financial matters

for the company. During their discussions, Mills concurred with many of Mr. Perry’s concerns.

Mr. Perry shared with Mills that he was considering placing Logsdon, and possibly other senior

management members, on a Performance Improvement Plan (or “PIP”) consistent with Excentus

HR policies and precedents with other non-performing employees.              But when Mr. Perry

conveyed to Mills that he would postpone any issuance of bonus payments (including one to

Mills), Mills became incensed and stormed out of the building.

D.       Defendants Conspire to Oust Mr. Perry and Plunder Excentus.

         52.         Defendants’ interest converged during the summary of 2014. They found in

each other willing co-conspirators to hijack Excentus and use it to achieve their respective aims,

no matter the cost to the company. It is Defendants’ actions during the summer of 2014 that give

rise to Mr. Perry’s derivative claims.

         53.         On the evening of July 31, 2014, Defendants set their scheme in motion. The

Defendant shareholders (holding just a little over fifty percent) called a secret meeting. Present



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                                                                                               R017
at the meeting were the Shapiras, Nicholson, Leigh Ann Epperson (Senior Vice President and

General Counsel of ADS), Logsdon, and Mills. They provided no notice of this meeting to

Excentus’ eight other shareholders (including, of course, Mr. Perry).

         54.         That night, Defendants enacted a series of changes to Excentus’ Bylaws to allow

them to take control of Excentus. The ultimate effect of their actions was:

               a. Changing Excentus’ Bylaws to explicitly permit a majority of the shareholders to
                  remove any officer, with or without cause, from his or her position, a power
                  previously reserved exclusively for the Board;

               b. Citing no reason for doing so, removing Mr. Perry from his positions as Chairman
                  of the Board, Chief Executive Officer and any other position he presently held at
                  the Company;

               c. Ousting two other long-time directors and shareholders from the Board, Art
                  Hinckley and Jim Callier;

               d. Electing Logsdon and Mills to the Board; and

               e. Waiving Giant Eagle’s right to force Excentus to repurchase its shares in the event
                  Mr. Perry was no longer an executive at Excentus, a right they had originally
                  demanded prior to investing in Excentus.

         55.         The very next morning, and surrounded by new lawyers (not the Norton Rose

Fulbright lawyers who for years had represented Excentus), Defendants held a meeting of their

“reconstituted” Excentus Board.          According to the company’s minutes, first, Defendants

formally abolished both the Executive Committee and the Special Litigation Committee Mr.

Perry had created upon the advice of Norton Rose Fulbright so that disinterested directors could

conduct Excentus’ affairs and litigation. Daniel Shapira then instructed that Giant Eagle be

provided with all of the Executive Committee’s records for the Shapiras’ review, even though

the litigation against the Shapiras was still pending. Second, Defendants called in a number of

the senior management members whose bonuses Mr. Perry has deferred and who worked directly

for Logsdon. They concocted a series of trumped-up charges against Mr. Perry so as to justify


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                                                                                                 R018
his termination (which, based on the pervious evening’s secret meeting, was evidently a foregone

conclusion). Third, and a mere minutes after concocting their trumped up charges against Mr.

Perry, Defendants authorized Logsdon to pay many of these same senior executives – including,

without limitation, Stacey Smotherman (Excentus’ General Counsel), Thomas Wightman, Scott

Schaper, and Mike Melson – tens of thousands of dollars. Fourth, the Defendants unanimously

approved indemnification for themselves, apparently well aware that their conduct would result

in personal liability. Fifth, the Defendants made Logsdon the new CEO and Nicholson the new

Chairman of the Board. And sixth, they fired Mr. Perry (again).

         56.         Their subsequent treatment of Mr. Perry, who had founded and successfully led

Excentus for eighteen years, evidences Defendants’ malicious intent. That same morning of

August 1, 2014, Mr. Perry received a call from Logsdon, Mills and Smotherman. They informed

him that he had been terminated by the “new majority of shareholders” for “cause.” They did

not explain to him what that supposed “cause” was. They had his car towed from the company

parking lot, at his expense; they cut off access to his cell phone; they cut off all of his health

benefits, despite knowing that Mr. Perry’s two daughters suffered from a chronic, life threatening

medical condition; and, in a final act of petty malice, they cancelled Mr. Perry’s own Fuel

Rewards Network MasterCard.

         57.         Defendants did not stop with Mr. Perry. That same day, Mr. Perry received a

phone call from his daughter, who was at the time also an Excentus employee. She told him she

had been pulled out of a meeting by security and was in the process of being escorted off the

premises. Mr. Perry also learned that day that Defendants had fired two long-time Excentus

employees close to Mr. Perry, and that they had removed from the Board two of his long-time




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                                                                                              R019
friends. These board members also happened to be two of Excentus’ original investors and

remained Excentus shareholders.

         58.         With Mr. Perry out of Excentus, Defendants began to reap the fruits of their

illicit bargain. Now in control of the company, each of the Defendants set to secure for him or

itself what they had previously sought from Excentus but had been denied by Mr. Perry.

         59.         First, almost immediately after ousting Mr. Perry Excentus, Giant Eagle, and the

Shapira filed emergency motions stating that “[r]ecent discussions between the new Chief

Executive Officer of Plaintiff Excentus Corporation and Defendants Giant Eagle, Inc., David

Shapira, and Daniel Shapira . . . suggest that the parties may be able to reach a settlement

agreement . . .”

         60.         Soon after, Excentus, Giant Eagle, and the Shapiras signed a purported

settlement agreement. That “agreement,” negotiated with the Shapiras sitting on both sides of

the table, turned out to be a complete sham. It contains a near total capitulation by Excentus of

all of the rights and interests that Excentus had successfully pursued in litigation against Giant

Eagle and the Shapiras. The Shapiras and Giant Eagle awarded themselves rights that they never

had and that a Texas federal court had denied them. Defendants also had Excentus make

hundreds of thousands of dollars in payments directly to the Shapiras, for no apparent reason

whatsoever. Defendants also modified the compensation structure of certain royalties for the

fuelperks! trademark and added the Fuel Rewards Network – a mark that Giant Eagle had had no

role in developing – to the marks covered by the agreement so as to require Excentus to pay for

its own marks’ use. Defendants also built in punitive provisions to ensure that Excentus could

not pursue its rights in court against Giant Eagle. This sham settlement agreement in effect

resulted in a complete grant of impunity to Giant Eagle and the Shapiras for their conduct, and



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                                                                                                 R020
also in a windfall of ill-gotten profits for Giant Eagle and the Shapiras far into the foreseeable

future.

          61.        Second, Defendants rewarded Logsdon, Mills, Smotherman, and the other

members of senior management with promotions, increased compensation, and hundreds of

thousands of unmerited bonus payments (including payments previously deferred by Mr. Perry).

Tellingly, on the same day that these executives were paid off, Nicholson sent a letter to Mr.

Perry threatening that some of those same executives who had just been paid tens of thousands of

dollars were ready to speak ill of Mr. Perry’s performance as CEO, so as to justify his

termination.

          62.        Third, Defendants caused Excentus to forego the valuable option rights secured

from ADS to repurchase their shares in Excentus. ADS remains an Excentus shareholder today,

which was the result ADS sought and Giant Eagle unsuccessfully fought for in court. What ADS

and Giant Eagle could not achieve publicly and legitimately they achieved secretly and illicitly.

          63.        Fourth, Defendants elected Nicholson as the new Chairman of the Board and

Upp as a new board member. Nicholson finally secured the place at the head of the table he

believed he deserved and, on information and belief, both Nicholson and Upp are reaping the

cash they purported to need.

          64.        Fifth, because the compensation structure of certain intellectual property

agreements between Auto-Gas and Excentus mirrored the agreements between Excentus and

Giant Eagle, on information and belief the “re-negotiated” Excentus-Giant Eagle agreements

resulted in an equal increase in what Excentus would have to pay Auto-Gas. Again, Auto-Gas

and Nicholson secured the cash they desperately needed from Excentus.




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                                                                                               R021
         65.         In essence, over the course of a few days during the summer of 2014, Defendants

hijacked and potentially destroyed the value Mr. Perry had built for Excentus. Instead of

conducting themselves in accordance with their duties of utmost loyalty and due care, the

director and officer Defendants breached their duties and acted in their own self-interest. The

shareholder Defendants aided and abetted them. Faced with no other options, Mr. Perry asks the

Court for injunctive relief that restores Excentus to its prior promise and monetary damages that

compensates the non-Defendant shareholders of Excentus.

                                          VI. CAUSES OF ACTION

                                          Breach of Fiduciary Duty

         66.         Plaintiff incorporates the preceding paragraphs as if fully set forth herein.

         67.         Defendants Daniel Shapira, David Shapira, Logsdon, Mills and Nicholson owe

Excentus duties of obedience, utmost loyalty, and due care, including a duty to use their

uncorrupted business judgment for the sole benefit of the Excentus.

         68.         Defendants Daniel Shapira, David Shapira, Logsdon, Mills and Nicholson have

breached the duties they owe to Excentus by acting to benefit themselves at the expense of

Excentus. Their conduct in terminated Mr. Perry and the actions they took following that

termination constitute breaches of the duties they owe to Excentus.

         69.         These breaches of duties were willful and in bad faith and they have caused

Excentus and its shareholders damage. Excentus is entitled to injunctive relief, actual damages,

and punitive damages.

                                 Aiding and Abetting Breach of Fiduciary Duty

         70.         Plaintiff incorporates the preceding paragraphs as if fully set forth herein.




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                                                                                                        R022
         71.         Defendants Giant Eagle, ADS, and Auto-Gas knowingly participated in the

breach of duty the director and officer Defendants carried out in the late summer of 2014, and as

such they became a joint tortfeasors with the fiduciaries and are liable as such.

         72.         Defendants Giant Eagle’s, ADS’s, and Auto-Gas’ aiding and abetting of the

breaches of fiduciary duties was willful and in bad faith and it has caused Excentus and its

shareholders damage. Excentus is entitled to injunctive relief, actual damages, and punitive

damages.

                                            Unfair Competition

         73.         Plaintiff incorporates the preceding paragraphs as if fully set forth herein.

         74.         The conduct of Defendants Giant Eagle, ADS, and Auto-Gas as described above

constitutes business conduct that is contrary to honest practice in commercial matters.

         75.         Defendants have gained an unfair advantage in the market by capitalizing on

Excentus’ customer relationships, prospective business opportunities, and trademarks, which

they have misappropriated for their own illicit use when they terminated Mr. Perry and paid

themselves off with rights and compensation they never previously had. Defendants conduct and

acts constitute unfair competition.

         76.         Defendants acts were willful and in bad faith and they have caused Excentus

damage. Excentus is entitled to injunctive relief, actual damages, and punitive damages.

                                             Civil Conspiracy

         77.         Plaintiff incorporates the preceding paragraphs as if fully set forth herein.

         78.         Defendants combined to accomplish an unlawful purpose, to wit, the above-

described torts.




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                                                                                                        R023
         79.         Defendants’ conspiracy was willful and in bad faith and it has caused Excentus

damage. Excentus is entitled to injunctive relief, actual damages, and punitive damages.

                                          Declaratory Judgment

         80.         Plaintiff incorporates the preceding paragraphs as if fully set forth herein.

         81.         Pursuant to Chapter 37 of the Texas Civil Practice & Remedies Code, Plaintiff

seeks a declaration that (a) all actions taken by Defendants as shareholders or directors of

Excentus on behalf of Excentus on July 31, 2014 are invalid and unenforceable; (b) all actions

taken by Defendants regarding the ADS option are invalid and unenforceable; (c) all actions

taken by Excentus after July 31, 2014 regarding its relationship with Giant Eagle, ADS, or

Auto-Gas are invalid and unenforceable; (d) all bonus payments or other compensation paid to

any Defendants by Excentus are invalid; and (e) the settlement agreement entered into by

Excentus, the Shapiras and Giant Eagle is invalid and unenforceable.

                                         Fraud by Nondisclosure

         82.         Plaintiff incorporates the preceding paragraphs as if fully set forth herein.

         83.         Despite having a duty to do so as Board members of Excentus, Defendants

David Shapira, Daniel Shapira, Logsdon, and Mills deliberately concealed from or failed to

disclose material information – Defendants’ scheme – to Excentus, including, without limitation,

to its Chief Executive Officer and Chairman of the Board. Defendants David Shapira, Daniel

Shapira, Logsdon, and Mills knew that Excentus was ignorant of the scheme and did not have an

equal opportunity to discover the scheme.

         84.         By failing to disclose the scheme, Defendants intended to induce Excentus to

refrain from acting. Excentus relied on Defendants’ nondisclosure.




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                                                                                                        R024
         85.          Excentus was injured as a result of acting without the knowledge of the

undisclosed facts.

              VII.     APPLICATION FOR APPOINTMENT OF RECEIVER AND/OR
                             TEMPORARY INJUNCTIVE RELIEF.

         86.          Plaintiff incorporates the preceding paragraphs as if fully set forth herein.

         87.          Pending the resolution of Plaintiff’s claims, Defendants will continue to manage

the affairs of Excentus, including without limitation this litigation. Accordingly, there is a

substantial risk of ongoing and irreparable harm to the rights and interests of Excentus so long as

Defendants continue leading Excentus and, particularly, its conduct vis-à-vis this litigation. The

actions of the persons presently governing Excentus are illegal, oppressive, and/or fraudulent.

         88.          Plaintiff therefore requests that the Court appoint a receiver to manage this

litigation on behalf of Excentus. Alternatively, Plaintiff requests that the Court issue temporary

and permanent injunctive relief, as follows:

         a.          Order a special committee be formed and maintained, made up of members
                     elected by majority vote of shareholders excluding the Defendants, to review and
                     approve any matter or action by the company that involves the person or business
                     interest of any of the Defendants.

         b.          Order a special committee be formed and maintained, made up of members
                     elected by majority vote of shareholders excluding the Defendants, to manage
                     Excentus’ response to this litigation (including any requests for indemnification
                     by Defendants).

         c.          Order that all compensation to be paid to any director or persons reporting to the
                     President, CEO or any executive officer of the company be approved by the same
                     special committee order.

         d.          Order that all shareholders be notified of all meetings of the directors or
                     shareholders while this litigation is pending.

         e.          Order that all meetings of directors, whether duly called or not, involving two or
                     more of the Defendants be video recorded and promptly provided to all
                     shareholders.



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                                                                                                         R025
         f.        Order that all information of any kind provided to directors as part of a meeting or
                   otherwise be promptly provided to all shareholders unless otherwise requested by
                   a shareholder.

         g.        Order that all meetings held by management to which at least a majority of
                   employees are invited to be made aware of the company’s business be video
                   recorded and promptly made available to a shareholders as requested.


                             VIII. REQUEST FOR EXPENSES INCURRED

         89.         Plaintiff has retained the undersigned counsel to represent him in this action, and

he has incurred and will continue to incur expenses for investigating and bringing the foregoing

claims on behalf of Excentus Corporation. Plaintiff requests that the Court award him all

expenses incurred, including without limitation reasonable attorneys’ fees and costs incurred, as

per to Section 21.561(b)(1) of the Texas Business Organizations Code.

                                           IX. JURY DEMAND

         90.         Plaintiff demands a trial by jury.

                                          RELIEF REQUESTED

         WHEREFORE, PREMISES CONSIDERED, Plaintiff Dickson Perry respectfully prays

that the Court:

         1.        Enter a judgment for Plaintiff on behalf of Excentus on Plaintiff’s claims for

                   damages in excess of $1,000,000, including actual, consequential, incidental, and

                   punitive damages, plus pre- and post-judgment interest;

         2.        Rescind the settlement agreement executed by Excentus and Defendants Giant

                   Eagle, David Shapira, and Daniel Shapira;

         3.        Place a constructive trust on all of the bonus payments illicitly made to Logsdon,

                   Mills, Wightman, Melson, and Schaper;

         4.        Order an accounting;


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                                                                                                   R026
         5.        Enter a declaration as described above;

         6.        Appoint a receiver, provisional director, and/or custodian, or, in the alternative,

                   enter temporary and permanent injunctive relief;

         7.        Award Plaintiff all expenses incurred in bringing his claims, including without

                   limitation reasonable attorneys’ fees and costs;

         8.        Award Plaintiff such other and further relief, both special and general, at law or in

                   equity, to which he may show himself to be justly entitled.




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                                                                                                    R027
DATED: June 25, 2015             Respectfully submitted,

                                 /s/Michael P. Lynn
                                 Michael P. Lynn, P.C.
                                 State Bar No. 12738500
                                 mlynn@lynnllp.com
                                 Jeremy A. Fielding
                                 State Bar No. 24040895
                                 jfielding@lynnllp.com
                                 Andrés Correa
                                 State Bar No. 24076330
                                 acorrea@lynnllp.com
                                 Andrew S. Hansbrough
                                 State Bar No. 24094700
                                 ahansbrough@lynnllp.com
                                 LYNN TILLOTSON PINKER & COX, LLP
                                 2100 Ross Avenue, Suite 2700
                                 Dallas, Texas 75201
                                 Telephone:     214.981.3800
                                 Facsimile:     214.981.3839
                                 ATTORNEYS FOR PLAINTIFF DICKSON
                                 PERRY




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                                                                 R028
                                 CERTIFICATE OF SERVICE

      The undersigned hereby certifies that a true and correct copy of the above and foregoing
document has been served as shown below on counsel of record on June 25, 2015:

Via Email                                         Via Email
Orrin L. Harrison III                             Lisa S. Gallerano
(oharrison@ghjhlaw.com)                           (lgallerano@akingump.com)
GRUBER HURST ELROD JOHANSEN HAIL                  Patrick O’Brien
SHANK, LLP                                        (pobrien@akingump.com)
1445 Ross Avenue, Suite 2500                      AKIN GUMP
Dallas, TX 75202                                  1700 Pacific Avenue, Suite 4100
Attorneys for Defendants                          Dallas, TX 75201-4624
Giant Eagle, Inc., David Shapira, and             Attorneys for Defendant
Daniel Shapira                                    Alliance Data Systems, Inc.

Via Email                                         Via Email
Bernard Marcus                                    Ken Carroll
(marcus@marcus-shapira.com)                       (kcarroll@ccsb.com)
Scott Livingston                                  Byran Erman
(livingston@marcus-shapira.com)                   (berman@ccsb.com)
Jonathan Marcus                                   Sara Romine
(jmarcus@marcus-shapira.com)                      (sromine@ccsb.com)
MARCUS & SHAPIRA LLP                              CARRINGTON, COLEMAN, SLOMAN &
301 Grant Street, 35th Floor                      BLUMENTHAL, L.L.P.
One Oxford Centre                                 901 Main Street, Suite 5500
Pittsburgh, PA 15219-6401                         Dallas, TX 75202-3767
Attorneys for Defendants                          Attorneys for Defendants
Giant Eagle, Inc., David Shapira, and             Brandon Logsdon and Jim Mills
Daniel Shapira

Via Email
Robert B. Wagstaff
(rwagstaff@mcmahonlawtx.com)
MCMAHON SUROVIK SUTTLE
P.O. Box 3679
Abilene, TX 79604
Attorney for Defendants
Randy Nicholson and Auto-Glass Systems, Inc.

                                           /s/ Andres Correa
                                           Andres Correa

4813-2413-6485, v. 1




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                                                                                         R029
Tab B
                                        CAUSE NO. DC-15-03853

DICKSON PERRY, derivatively on                            §                IN THE DISTRICT COURT
behalf of EXCENTUS CORPORATION,                           §
                                                          §
          Plaintiff,                                      §
                                                          §
vs.                                                       §                DALLAS COUNTY, TEXAS
                                                          §
                                                          §
EXCENTUS CORPORATION,                                     §
BRANDON LOGSDON, JIM MILLS,                               §
GIANT EAGLE, INC., DAVID                                  §
SHAPIRA, DANIEL SHAPIRA, AUTO-                            §
GAS SYSTEMS, INC., RANDY                                  §
NICHOLSON, and                                            §               68TH JUDICIAL DISTRICT
ALLIANCE DATA SYSTEMS, INC.,                              §
                                                          §
          Defendants,                                     §



    DEFENDANT GIANT EAGLE, INC.’S MOTION TO DISMISS FOR COLLATERAL
      ESTOPPEL OR, IN THE ALTERNATIVE, PURSUANT TO THE GOVERNING
                        FORUM SELECTION CLAUSE

          Defendant Giant Eagle, Inc. (“Giant Eagle”) files this motion requesting that this Court

dismiss the First Amended Petition (“First Am. Pet.”) on the basis of collateral estoppel, which

precludes Plaintiff Dickson Perry (“Perry”) from bringing this lawsuit against Giant Eagle in

Texas.1




1
 Defendants David Shapira and Daniel Shapira (together, “the Shapiras”) filed a Verified Special Appearance and
Motion Objecting to Jurisdiction prior to joining Giant Eagle’s Plea to Jurisdiction, Motions to Dismiss, Plea in
Abatement, Special Exceptions, and Original Answer to Plaintiff’s Original Petition (“Original Answer”). The
Shapiras joined the Original Answer subject to their Special Appearance. See Original Answer at 1, n.1. The
Shapiras’ Special Appearance is still pending.
To avoid waiving the Shapiras’ Special Appearance, the present Motion to Dismiss for Collateral Estoppel is filed
on behalf of Giant Eagle only. However, as explained throughout, collateral estoppel also bars Perry’s claims
against the Shapiras in Texas. Accordingly, judicial efficiency would be served by hearing the present collateral
estoppel motion before requiring the parties to undertake jurisdictional discovery related to the Shapiras’ Special
Appearance. If the Court grants the present motion, the Shapiras will withdraw their Special Appearance and will
request dismissal of the claims against them on the basis of collateral estoppel.

DEFENDANT GIANT EAGLE, INC.’S MOTION TO DISMISS FOR COLLATERAL ESTOPPEL
OR, IN THE ALTERNATIVE, PURSUANT TO THE GOVERNING FORUM SELECTION CLAUSE                                   PAGE 1
A0927450.9/234716.docx


                                                                                                              R030
                 I.      SUMMARY OF GROUNDS FOR MOTION TO DISMISS

         Collateral estoppel exists precisely for cases like this, where a party unhappy with the

outcome of a previous lawsuit wants a second bite at the apple. A federal district court has

already held that Texas is not the proper forum for this litigation. Excentus Corp. v. Giant Eagle,

Inc., 3:11-cv-03331, 2012 WL 2525594, at *8-11 (N.D. Tex. July 2, 2012) (Boyle, J.) (attached

as Ex. 1). Perry, through this derivative action, is not entitled to another try.

         In 2010, the Excentus Corporation (“Excentus”), in litigation led by then-Chairman and

CEO Perry, sued Giant Eagle and the Shapiras in the U.S. District Court for the Northern District

of Texas (the “First Texas Case”). The First Texas Case set forth essentially the same claims as

here, including that Giant Eagle owes Excentus additional compensation for the use of certain

Excentus technology and that the Shapiras breached their fiduciary duties as members of the

Excentus Board of Directors (the “Board”) by taking the position that Giant Eagle did not owe

additional compensation because it already had licensed the right to use the disputed technology.

         Giant Eagle and the Shapiras argued that two Stock Purchase Agreements (“SP

Agreements”) between Giant Eagle and Excentus—whereby Giant Eagle invested over $7

million in Excentus, obtained a license to use Excentus’ technology, and nominated the Shapiras

to the Excentus Board—provided Giant Eagle with a defense to Excentus’ claims. Specifically,

the SP Agreements provided Giant Eagle with both a license to the disputed technology and a

warranty of non-infringement, and, as a result, Giant Eagle could not be liable for infringing

Excentus’ potential technology.

         Relevant here, the SP Agreements contained a mandatory forum selection clause

requiring any claims arising out of them to be brought where the respondent’s principal offices

are located. Giant Eagle’s and the Shapiras’ principal office is in Allegheny County,

Pennsylvania. Therefore, Giant Eagle and the Shapiras moved to dismiss for improper venue,

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arguing that although Excentus’ complaint did not expressly allege any breaches of the SP

Agreements, the forum selection clause still applied because it provided Giant Eagle and the

Shapiras with a defense to all claims asserted against them.

           Judge Boyle agreed with Giant Eagle and held that because “resolution of [the] claims

clearly requires the Court to construe the [SP] Agreements, given Giant Eagle’s reliance on the

Agreements as a defense,” the forum-selection clause within those agreements applied and the

case could only be brought in Pennsylvania. Excentus, 2012 WL 2525594, at *8-11 (Ex. 1).2

The court dismissed the case without prejudice for improper venue. Id. As a result of this

decision, collateral estoppel plainly bars Perry’s second attempt, purportedly on behalf of

Excentus, to sue Giant Eagle and the Shapiras in Texas because it already has been decided that

Texas is not a proper forum.

           All three elements of collateral estoppel are met. First, this case raises the exact same

issues that were fully and fairly litigated in the First Texas Casenamely, whether the SP

Agreements’ forum selection clause applies to claims, like those here, that require the court to

examine the parties’ respective rights under those agreements. The clause does apply, and Texas

is not a proper forum. Id. at *9 (“the Court must look to the [SP] Agreements to determine

whether Giant Eagle’s defenses are valid and therefore the forum selection clauses contained in

them are applicable.”). Second, the federal court’s enforcement of the forum selection clause

was essential to its judgment regarding the proper venue for the First Texas Case. Finally, this

case involves the same parties, as both the First Texas Case (brought by Excentus) and the

present case (brought derivatively on behalf of Excentus) purport to represent the interests of

Excentus shareholders against Giant Eagle and the Shapiras.


2
    All of the documents attached to this motion were considered by the court in the First Texas Case.

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         Giant Eagle first raised this collateral estoppel defense in its Original Answer (filed June

5, 2015). Perry then amended his Petition in a transparent attempt to avoid collateral estoppel.

The amendment is futile and only highlights the fact that no amount of creative pleading can

maneuver around the preclusive effect of Judge Boyle’s decision in the First Texas Case. For

example, the First Amended Petition dropped the word “patents” and instead uses “technology”;

however, this rewording has no effect because the term “technology” encompasses the “patents”

at issue, the rights to which are set forth in the SP Agreements. Compare Original Petition ¶ 29

with First Am. Pet. ¶ 32. Further, the First Amended Petition revises the unfair competition

claim by deleting the allegation that Giant Eagle unfairly capitalized on Excentus’ “proprietary

technology” and “intellectual property,” and replaces it with the allegation that Giant Eagle “paid

[itself] off with rights and compensation they never previously had.” Of course, the “rights”

Giant Eagle allegedly awarded itself are the “rights” to certain “proprietary technology” and

“intellectual property” covered by the license Giant Eagle received under the SP Agreements.

Compare Orig. Pet. ¶ 73 with First Am. Pet. ¶ 75.3

         Ultimately, the First Amended Petition’s wordsmithing does not change the facts: Perry

is seeking, through his derivative action on behalf of Excentus, to bring claims against Giant

Eagle and the Shapiras arising out of actions they took with respect to the parties’ rights under

the SP Agreements. In other words, Perry seeks to reinstate—in Texas—a lawsuit that was

already dismissed from the state because it is an improper forum. Perry’s attempt to artfully

plead his way around a very straightforward case of collateral estoppel fails and, accordingly,

this case should be dismissed.



3
  In the First Texas Case, Excentus, in litigation initiated and directed by Perry, similarly tried to avoid the forum
selection clause in the SP Agreements by avoiding mentioning the SP Agreements by name. This attempt to dodge
the forum selection clause through creative pleading was rejected.

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                         II.   FACTS SUPPORTING MOTION TO DISMISS

                                                   A. The Parties

           1.      Perry purports to bring this action “derivatively on behalf of Excentus

Corporation.” First Am. Pet. at p. 1. Perry is an Excentus shareholder and previously served as

its Chairman and CEO. Id.

           2.      Giant Eagle is a Pennsylvania corporation with its principal place of business in

Allegheny County, Pennsylvania. Id. ¶ 6.4

           3.      The Petition asserts that venue is proper in Dallas County “because a substantial

part of the events or omissions giving rise to the claims occurred in Dallas County, Texas.” Id. ¶

14. Defendants have specifically denied this allegation. See Original Answer ¶ 35.5

                         B. Excentus’ Relationship with Giant Eagle and the Shapiras

           4.      In 2002, Excentus and Giant Eagle entered into a Software License and General

Services Agreement (the “Software License”) (attached as Exhibit 2) under which Excentus

granted Giant Eagle a non-exclusive license to use Excentus’ fuel site controller technology in

connection with Giant Eagle’s fuelperks! program—a program that rewards customers with a

discount on their fuel based on grocery store purchases made using a customer loyalty card.

First Am. Pet. ¶ 21. The Software License remains in full force and effect.6

           5.      In two separate transactions in 2004 and 2005, respectively, Giant Eagle invested

over $7 million in Excentus pursuant to two nearly identical agreements, thereby becoming the

first “major investor” in Excentus. First Am. Pet. ¶¶ 19-23.

4
  Defendant David Shapira is a citizen and resident of Pennsylvania, a Director of Excentus, and Executive
Chairman of the Board of Directors of Giant Eagle. Id. ¶ 7. Daniel Shapira is a citizen and resident of Pennsylvania
and a Director of Excentus. Id. ¶ 8.
5
 Giant Eagle’s General Denial in its Original Answer extends to the claims asserted in the First Amended Petition.
See Tex. R. Civ. P. 92.
6
    The Software License was with Excentus’ predecessor-in-interest, CCISTech, Inc.

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         6.       In the 2004 transaction, Giant Eagle invested approximately $3 million in

Excentus pursuant to a Series A Stock Purchase Agreement (the “2004 SP Agreement”). See

2004 SP Agreement (attached as Ex. 3). In exchange, Excentus warranted that “none of the

Intellectual Property currently sold or licensed by [Excentus] to any Person . . . infringes upon or

otherwise violates any Intellectual Property rights of others.” Id. at ¶ 3.09(d). Excentus fully

indemnified Giant Eagle for any claim arising out of “any misrepresentation or breach of [this]

warranty” by Excentus. Id. ¶ 7.01(a). Excentus also granted Giant Eagle the “non-exclusive

right to license [Excentus’] Products and to establish retail/gas station alliances utilizing

[Excentus’] Products in any market in which [Giant Eagle] operates as of or after the Closing

Date.” Id. at ¶ 5.06. “Products,” in turn, is defined as the technology Excentus licensed to Giant

Eagle under the Software License “and all improvements and enhancements thereto . . . .” Id.

Together, this language makes clear that the 2004 SP Agreement gave Giant Eagle the right to

use whatever Excentus technology—including patented technology—it needed for its fuelperks!

program, as well as all “improvements and enhancements” to that technology.

         7.       Also pursuant to the 2004 SP Agreement, Excentus granted Giant Eagle “the right

to nominate one candidate . . . for election to [its] Board of Directors.” Id. at ¶ 5.07. The 2004

SP Agreement expressly designated David Shapira as Giant Eagle’s initial representative on the

Excentus Board. Id.

         8.       Of critical importance here, the 2004 SP Agreement provides: “VENUE FOR

ANY       ACTION         ARISING    OUT     OF    THIS     AGREEMENT          SHALL       RESIDE

EXCLUSIVELY IN THE COUNTY IN WHICH THE RESPONDENT’S PRINCIPAL

OFFICES ARE LOCATED.” Id. ¶ 8.06 (emphasis in original).




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         9.       In the 2005 transaction, Giant Eagle made an additional $4 million investment

pursuant to a Series B Preferred Stock Purchase Agreement (the “2005 SP Agreement”) which

is, in all material respects, identical to the 2004 SP Agreement, including the forum selection

clause. See 2005 SP Agreement ¶ 8.06 (attached as Ex. 4). The 2005 SP Agreement allowed

Giant Eagle to nominate an additional candidate for the Excentus Board. Id. ¶ 8.06. Giant Eagle

nominated Daniel Shapira who was then appointed to the Board. First Am. Pet. ¶ 23.

         10.      In 2010, Excentus and Giant Eagle entered into an addendum to the Software

License, under which Excentus granted Giant Eagle an additional non-exclusive license “to

make, have made, use, reproduce, and make derivative works of, the source code” for its fuel cite

controller technology.      See Addendum No. 1 to Software License and General Services

Agreement (“SL Addendum”) at ¶ 1(a) (attached as Ex. 5). As a result of the Software License

and SL Addendum, Giant Eagle obtained the right to use both the source and object codes to

Excentus’ fuel controller software.

        C. Excentus sues Giant Eagle and the Shapiras in Federal District Court in Texas

         11.      Unfortunately, the agreements setting forth the parties’ respective rights did not

stop Perry from setting in motion an onslaught of fruitless litigation that he now – via derivative

action – seeks to relitigate in Texas, despite being precluded from doing so by the prior judgment

of a Texas federal court.

         12.      In 2010, Perry, while serving as Chairman and CEO of Excentus, caused

Excentus to sue Giant Eagle and the Shapiras in the U.S. District Court for the Northern District

of Texas (the “First Texas Case”). The Second Amended Complaint (“S.A.C.”) in that case

alleged Breach of Duties of Loyalty and Utmost Good Faith, Declaratory Judgment, and Patent

Infringement. See S.A.C. (attached as Ex. 6). The First Texas Case was based on the same

legally untenable position asserted here; namely, that Giant Eagle owes Excentus additional

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compensation for its use of certain Excentus technology, and that the Shapiras breached their

fiduciary duties to Excentus by taking the position that Giant Eagle did not owe additional

compensation because Giant Eagle already had rights to the disputed technology under the

parties’ SP Agreements. See generally id.

         13.      Giant Eagle’s defense in the First Texas Case was the same as its defense will be

here. Excentus, through the SP Agreements, granted Giant Eagle a license to use the technology

that formed the basis of Excentus’ intellectual property claims and granted Giant Eagle a

warranty of non-infringement. Excentus, 2012 WL 2525594, at *6-8. Because this defense

required the court to determine the parties’ rights under the SP Agreements, Giant Eagle and the

Shapiras moved to dismiss for improper venue, arguing that the mandatory forum selection

clause in those agreements required Excentus to sue them in Pennsylvania. Id.; see also Exs. 3, 4

§ 8.09. The principal issues before Judge Boyle were (1) whether the mandatory forum selection

clause applied even though Excentus did not directly assert a breach of those Agreements, and

(2) whether the forum selection clause applied to the Shapiras even though they were not

signatories to those agreements.

                                D. The Decision in the First Texas Case

         14.      In her decision, Judge Boyle noted that although the court was not deciding

whether the SP Agreements did, in fact, grant Giant Eagle a license to use certain Excentus

patents—i.e., the court was not deciding the merits of Giant Eagle’s defense—it had to “look to

the Stock Purchase Agreements to determine whether Giant Eagle’s defenses are valid” and,

therefore, “the forum selection clauses contained in them are applicable.” Excentus, 2012 WL

2525594, at *9 (Ex. 1). Judge Boyle noted that although “Excentus’ claims do not rely on the

[SP] Agreements, . . . resolution of these claims clearly requires the Court to construe the [SP]

Agreements, given Giant Eagle’s reliance on the Agreements as a defense.” Id. at *9-10.

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         15.      The court further held that it was required to construe the SP Agreements to

resolve all of Excentus’ claims—which included breach of the duty of loyalty and good faith,

patent infringement, and unfair competition—because the claims asserted “involve[d] Giant

Eagle’s obligations under the [SP] Agreements, whether Giant Eagle had a license to the patents

at issue, or whether such purported license is a defense to Excentus’ claims.” Id. at *10. In

addition, the court held that the Shapiras, who were sued, as they are here, for breach of duties

owed as Excentus Board members, could invoke the forum selection clause “given the

relatedness of the Shapiras to the dispute between Excentus and Giant Eagle.” Id. at *10, n. 10.7

         16.      Accordingly, the court dismissed the case for improper venue. Id.8 Excentus re-

filed its lawsuit in the U.S. District Court for the Western District of Pennsylvania. Excentus v.

Giant Eagle, Inc., No. 2:13-cv-00178-JFC (W.D. Pa. 2013). That case was resolved by the

Settlement Agreement referenced in the First Amended Petition. See First Am. Pet. ¶¶ 59-60.

                                      III.    LEGAL ARGUMENT

         Collateral estoppel precludes Perry from pursuing this misguided lawsuit in Texas.

Resolution of the claims asserted here will turn on the same issues as in the First Texas Case, in

particular, the parties’ rights to certain technology and the propriety of certain actions taken by

Giant Eagle and the Shapiras with respect to those rights, as provided in the SP Agreements. As

the Northern District of Texas held, reliance on these Agreements as a defense triggers the
7
  Judge Boyle also held that the forum selection clause was “valid and enforceable” on its face because “it is neither
unfair nor unreasonable to require the party initiating litigation to sue in the county of the respondent, as agreed to
by the parties, which evidences the parties’ apparent desire to discourage litigation.” Id. at *6. Further, because the
forum selection clause provided that venue “shall reside exclusively in the county in which the respondent’s
principal offices are located,” the provision was held to be mandatory rather than permissive. Id. at *6, n.4.
8
  Although Excentus argued in the First Texas Case that certain provisions in the SP Agreements had expired, the
forum selection clause was not one of them. To the contrary, Excentus expressly invoked and relied upon the forum
selection clause in companion litigation in federal court in Pennsylvania. Accordingly, any argument by Perry here
that certain provisions of the SP Agreements are expired has no impact on the preclusive effect of Judge Boyle’s
decision in the First Texas Case—the issue of whether certain provisions of the SP Agreements had expired was
raised to Judge Boyle, and she nevertheless dismissed the action based on the forum selection clause. That finding
precludes this second attempt to sue in Texas.

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Agreements’ mandatory forum selection clause. That clause requires this case to be brought

against Giant Eagle (and the Shapiras) in Allegheny County, Pennsylvania.

                                 A. Overview of Collateral Estoppel

         Collateral estoppel is intended to “promote judicial efficiency, protect parties from

multiple lawsuits, and prevent inconsistent judgments by precluding the relitigation of matters

that have already been decided . . . in a prior suit.” In re Team Rocket, L.P., 256 S.W.3d 257,

260 (Tex. 2008). “[O]nce a court has decided an issue of fact or law necessary to its judgment,

that decision may preclude relitigation of the issue in a suit on a different cause of action

involving a party to the first case.’” Davillier v. Sw. Sec., FSB, No. 3:12-CV-2413-D, 2012 WL

6049014, at *2 (N.D. Tex. Dec. 5, 2012) (quoting Allen v. McCurry, 449 U.S. 90, 94 (1980)).

Collateral estoppel applies to issues of venue and forum selection clauses. Id. at *2-3; see also

Duffy & McGovern Accommodation Servs. v. QCI Marine Offshore, Inc., 448 F.3d 825, 829-30

(5th Cir. 2006) (“[T]his and other courts have held that . . . dismissals based on valid forum

selection clauses are preclusive.”).      “Texas applies the doctrine of collateral estoppel in

accordance with traditional federal common law.” Hanson v. Odyssey Healthcare, Inc., 2007

WL 5186795, at *3, n.4 (citing Sysco Food Servs., Inc. v. Trapnell, 890 S.W.2d 796, 802, n.7

(Tex. 1994)).

         “[T]o invoke the doctrine of collateral estoppel, a party must establish (1) the facts sought

to be litigated in the first action were fully and fairly litigated in the prior action; (2) those facts

were essential to the judgment in the first action; and (3) the parties were cast as adversaries in

the first action.” Eagle Props., Ltd. v. Scharbauer, 807 S.W.2d 714, 721 (Tex. 1990). The

doctrine does not require an identity of claims or parties in the original and subsequent actions.

Collateral estoppel, rather, “precludes the relitigation of identical issues actually litigated in a

previous action, even though the subsequent action is based upon a different cause of action.”

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Wilhite v. Adams, 640 S.W.2d 875, 876 (Tex. 1982) (emphasis added). Moreover, “[s]trict

mutuality of parties is no longer required.” Eagle Props., 807 S.W.2d at 721 (citing Petta, 44

S.W.3d at 579). Instead, “[i]t is only necessary that the party against whom collateral estoppel is

being asserted was a party or in privity with a party in the first action.” Id. Each of the three

elements for collateral estoppel is satisfied here.

       B. The Applicability of the Forum Selection Clause in the SP Agreements was Fully
                            and Fairly Litigated in the First Texas Case

         Whether the SP Agreements’ forum selection clause applies when raised as a defense was

fully litigated in the First Texas Case and is front-and-center once again. Just as in the First

Texas Case, Giant Eagle (and the Shapiras) will be asserting the SP Agreements as a defense

because the key factual allegations asserted here are, in all material respects, virtually identical to

those asserted in the First Texas Case:

              (1) Perry alleges that “[t]he Shapiras were not on Excentus’ board to loyally serve
                  Excentus’ best interests” and that “they worked tirelessly to benefit and protect
                  Giant Eagle.” First Am. Pet. ¶ 31. The First Texas Case was premised on the
                  same theory that “in many dealings related to Excentus, the Shapiras have placed
                  Giant Eagle’s interests ahead of Excentus’ interests.” S.A.C. ¶ 29 (Ex. 6).

              (2) Perry alleges that Giant Eagle has not properly compensated Excentus for the use
                  of certain technology. First Am. Pet. ¶ 32; see also id. ¶ 34 (“David Shapira went
                  so far as to state that prior to their dispute, he was willing to have Giant Eagle pay
                  Excentus for use of Excentus’ technology. But now he was not going to allow
                  Giant Eagle to pay one [expletive] penny.”). The First Texas Case contains
                  nearly identical allegations. See S.A.C. ¶ 29 (Ex. 6) (“Giant Eagle and the
                  Shapiras have refused to act in good faith to negotiate a license or other
                  agreement to provide Giant Eagle with the right to use the Excentus Patents and to
                  compensate Excentus fairly for such use.”).

              (3) Perry alleges that the Shapiras were “furious” about the announcement of the Fuel
                  Rewards Network (“FRN”) when they should have been happy about it. First
                  Am. Pet. ¶ 33. The First Texas Case alleges the same thing. See S.A.C. ¶ 34 (Ex.
                  6) (“[i]nstead of cheering the rollout of the FRN which is to the great benefit of
                  Excentus, the Shapiras have complained of it and looked for excuses to object to
                  it because they have placed their own interests and those of Giant Eagle ahead of
                  Excentus.”).


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              (4) Perry alleges that Giant Eagle acted to “aid and abet” the Shapiras’ alleged
                  breaches of their fiduciary duties. First Am. Pet. ¶¶ 68, 71 (alleging that Giant
                  Eagle “knowingly participated” in helping the Shapiras breach their duties “by
                  acting to benefit themselves at the expense of Excentus.”). The First Texas Case
                  similarly alleged that Giant Eagle acted through the Shapiras “to disrupt and gain
                  control of Excentus through breaches of the Shapiras’ duties of loyalty and utmost
                  good faith,” S.A.C. ¶ 29 (Ex. 6), and pled that “the actions of the Shapiras . . .
                  constitute the acts of Giant Eagle.” Id. ¶ 28; and

              (5) Likewise, Perry’s unfair competition claim is nothing more than a revised version
                  of the patent infringement claims set forth in the First Texas Case. Perry alleges
                  that Giant Eagle has “gained an unfair advantage in the market by capitalizing on
                  Excentus’ customer relationships, prospective business opportunities, and
                  trademarks which [Giant Eagle] [has] misappropriated for [its] own illicit use
                  when they terminated Mr. Perry and paid themselves off with rights and
                  compensation they never previously had.” First Am. Pet. ¶ 75 (emphasis added).
                  The “rights” referred to here are the rights to the technology that was at the heart
                  of the First Texas Case. Indeed, in the First Texas Case, Excentus alleged
                  essentially the exact same claims, although in language of patent infringement.
                  See S.A.C. ¶ 64 (Ex. 6) (“Giant Eagle gained an unfair advantage in the market by
                  capitalizing on Excentus’ efforts and success in its fuel discount systems by
                  infringing its patents and gaining access to Excentus’ confidential and proprietary
                  information and technology and then using these for Giant Eagle’s benefit and
                  against Excentus in the marketplace, which are acts that constitute unfair
                  competition under the common law.”).

         As these examples demonstrate, the issues raised here are the same as the issues raised in

the First Texas Case and the defense will be the same. The “technology” referred to throughout

the First Amended Petitionand for which Giant Eagle is alleged to owe additional

compensationis the patents that Excentus purchased from Defendant Auto-Gas in 2008. First

Am. Pet. ¶ 28. This technology, however, either existed or was based on claimed technology

that existed (and was disclosed) before Excentus represented in the SP Agreements that none of

its technology infringed upon any other existing patents. Thus, the license granted by Excentus

to Giant Eagle in the Software License, and reaffirmed in the SP Agreements, is fatal to any

claims by Perry that (1) Giant Eagle owes additional compensation; (2) the Shapiras violated

their fiduciary duties by taking the position that Giant Eagle already had a license to the disputed



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technology; or (3) the Settlement Agreement between Excentus and Giant Eagle resolving the

parties’ claims to the disputed technology under the SP Agreements was a “complete sham.”

         As Giant Eagle alleged in the First Texas Case, this license granted Giant Eagle the right

to use Excentus’ fuel site controller technology and “all improvements and enhancements

thereto.”     Ex. 3 ¶ 5.06.       By definition, any later acquired patents involving the same

technology—such as the patents Excentus allegedly bought from Auto-Gas, which were known

at the time of the original Software License—would provide a complete bar to any claim for

additional compensation based on Giant Eagle’s use of this licensed technology.9 This point, as

her opinion makes clear, was not lost on Judge Boyle. Moreover, Excentus’ warranty of non-

infringement (and related indemnification) in the SP Agreements covered any patents existing at

that time, which includes the patents for which Perry now claims Giant Eagle owes additional

compensation. Thus, the SP Agreements provide Giant Eagle (and the Shapiras) with a defense

to Perry’s claims, as their alleged conduct was entirely consistent with the parties’ respective

rights under the SP Agreements.

         On top of that, the relief Perry seeks—including rescission of the Settlement Agreement

resolving the parties’ disputes about their rights under the SP Agreements—demonstrates why

collateral estoppel is so important here. First Am. Pet. at p.26, ¶ 2. Rescission of the Settlement

Agreement that ultimately resolved the claims asserted in the First Texas Case (and later re-filed

in Pennsylvania) would result in the reinstatement—in Texas—of the exact same litigation that

already was dismissed out of Texas by Judge Boyle. This would be a blatant end-run around the

principles of collateral estoppel.       Perry cannot “sidestep the reach of a contractual forum-



9
  DeForeste Radio Tel. & Tel. Co. v. United States, 273 U.S. 236, 242 (1927); Corebrace LLC v. Star Seismic LLC,
2008 WL 7071435, at *5 (D. Utah July 18, 2008) (“the licensee’s rights under that agreement remain intact and
[p]laintiff’s claims for … infringement fail to state a claim for which relief may be granted.”).

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selection clause by suing under causes of action sounding in tort.” Ginter, 536 F.3d at 445;

accord Marinechange Shipping Ltd. v. Sebastian, 143 F.3d 216, 220-21 (5th Cir. 1998).

Moreover, Perry argues that the Settlement Agreement was a “complete sham” because “[t]he

Shapiras and Giant Eagle awarded themselves rights that they never had” and that it “resulted in

a complete grant of impunity to Giant Eagle and the Shapiras for their conduct” with respect to

the parties’ usage of, and rights to, certain technology. First Am. Pet. ¶ 60. Of course, the only

way for a court to determine whether the Settlement Agreement resolving a dispute about the

parties’ rights under the SP Agreements was a “sham” would be to construe the parties’ rights

under the SP Agreements. As explained throughout, construing these Agreements triggers the

forum-selection clause.

         Accordingly, because “resolution of [the] claims clearly requires the Court to construe

the [SP] Agreements, given Giant Eagle’s reliance on the Agreements as a defense,” the forum-

selection clause within those Agreements applies and this case must be brought in

Pennsylvanianot Texas. Excentus, 2012 WL 2525594, at *9-10 (Ex. 1); see also Fuchs Family

Trust v. Parker Drilling Co., No. 9986-VCN, 2015 WL 1036106 (Del. Ch. March 4, 2015)

(unpublished) (applying Texas collateral estoppel law to bar subsequent derivative litigation

where the subsequent action was “based on the same underlying operative facts” and noting

“[t]hat the two plaintiffs may have offered somewhat different theories…does not deprive the

[initial action] of preclusive effect.”). The first element of collateral estoppel is satisfied because

the applicability of the forum selection clause already has been litigated and decided.

           C. The Finding that the Forum Selection Clause Applied was Essential to the
                                            Judgment

         The federal district court’s holding that the forum selection clause applied was essential

to the judgment in the First Texas Case; indeed, it was the very reason for dismissal. Excentus,


DEFENDANT GIANT EAGLE, INC.’S MOTION TO DISMISS FOR COLLATERAL ESTOPPEL
OR, IN THE ALTERNATIVE, PURSUANT TO THE GOVERNING FORUM SELECTION CLAUSE                       PAGE 14
A0927450.9/234716.docx


                                                                                                  R043
2012 WL 2525594, at *8 (“The Court finds that the [SP] Agreements’ forum selection clauses

are applicable in this case, and therefore venue is improper.”); Davillier, 2012 WL 6049014, at

*1 (“collateral estoppel bars the parties from relitigating the enforceability or applicability of the

forum selection clause in the parties’ . . . agreement.”). The second element is satisfied.

                D. The Parties Were Cast as Adversaries in the Original Texas Action

         Collateral estoppel operates “against persons who have had their day in court either as a

party to the prior suit or as a privy, and, where not so, that, at the least, the presently asserted

interest was actually and adequately represented in the prior trial.” Eagle Prop., 807 S.W.2d at

721 (Tex. 1990) (quotations omitted). The doctrine does not require that the parties in both

actions be identical; “rather, it is only necessary that the party against whom the plea of collateral

estoppel is being asserted be a party or in privity with a party in the prior litigation.” Id.

(citations omitted). “People can be in privity in at least three ways: (1) they can control an action

even if they are not parties to it; (2) their interests can be represented by a party to the action; or

(3) they can be successors in interest, deriving their claims through a party to the prior action.”

Id. (citing Amstadt v. U.S. Brass Corp., 919 S.W.2d 644, 653 (Tex. 1996)). “The judgment in an

action to which the corporation is a party is binding under the rules of [collateral estoppel] in a

subsequent action by its stockholders or members suing derivatively on behalf of the corporation

. . . .” RESTATEMENT (SECOND) OF JUDGMENTS § 59(2) (1982).10

         The application of these privity principles is straightforward. In the First Texas Case,

Excentus was the named Plaintiff and represented the corporation’s (i.e., the shareholder’s)

10
   See also COMMERCIAL RELATIONSHIPS, 18A Fed. Prac. & Proc. Juris. § 4460 (2d ed.) (because a derivative
proceeding “is on the claim of the corporation, any judgment that precludes the claim of the corporation also
precludes a derivative action to enforce that claim.”); Foreman v. Gen. Motors Corp., 625 F. Supp. 1048 (S.D. Ohio
1985) (holding that individual shareholders could not relitigate breach of contract claims that had already pursued by
the corporation); In re Horne, 44 B.R. 796, 797 (Bankr. S.D. Fla. 1984) (citing Montana v. U.S., 440 U.S. 147, 154)
(dismissal of a prior proceeding brought by a corporation “constitutes an adjudication on the merits and this debtor,
whose present claim is derivative, is collaterally estopped from relitigating those issues.”).

DEFENDANT GIANT EAGLE, INC.’S MOTION TO DISMISS FOR COLLATERAL ESTOPPEL
OR, IN THE ALTERNATIVE, PURSUANT TO THE GOVERNING FORUM SELECTION CLAUSE                                     PAGE 15
A0927450.9/234716.docx


                                                                                                                 R044
interests against Giant Eagle and the Shapiras. Perry was a major shareholder and CEO of

Excentus; his interests were well-represented. As misguided and meritless as the present case

may be, Perry is seeking, through this purported derivative action, to represent the same interests

(Excentus shareholders against Giant Eagle and the Shapiras) that Excentus represented in the

First Texas Case. See TEX. BUS. ORGS. CODE § 21.551(1) (“Derivative proceeding” means a

civil suit in the right of a domestic corporation); In re Sonus Networks, Inc. Shareholder

Derivative Litig., 499 F.3d 47, 63 (1st Cir. 2007) (applying collateral estoppel to bar second

derivative lawsuit because “[i]t is a matter of black letter law that the plaintiff in a derivative suit

represents the corporation, which is the real party in interest”).11 If this derivative suit were

successful, the relief requested would flow to Excentus. See Hanson, 2007 WL 5186795, at *5

(“an individual shareholder bringing a derivative claim is at best a nominal plaintiff. . . . The

corporation is the real party in interest; it receives the proceeds of the action and is bound by the

results of the suit. . . . Therefore, [the corporation] is the true plaintiff in this suit, just as it was in

the State Court Derivative Action.”). The privity element is satisfied.12




11
   See also Hanson, 2007 WL 5186795, at *5 (holding that “because [plaintiff] and the state court plaintiffs both
represent identical interests—Odyssey and all of its shareholders—the Court finds that the parties to this suit were
indeed cast as adversaries” in the previous action); LeBoyer v. Greenspan, No. 03-cv-5603, 2006 WL 2987705, at
*3 (C.D. Cal. Oct. 16, 2006) (“differing groups of shareholders who can potentially stand in the corporation’s stead
are in privity for the purposes of issue preclusion.”). Moreover, the same reasoning that Judge Boyle applied in
finding that the Shapiras could invoke the forum selection clause—namely, “the relatedness of the Shapiras to the
dispute between Excentus and Giant Eagle,” Excentus, 2012 WL 2525594, at *10, n.10—applies to bind Perry, an
Excentus shareholder and former CEO, to the results of that dispute.
12
  In the alternative, even if the Court finds the elements of collateral estoppel are not met here, the Court should
nevertheless dismiss this case based on the forum selection clause for the same reasons outlined in Judge Boyle’s
opinion. The forum selection clause applies because the Court is required to determine the parties’ rights under the
SP Agreements to resolve Perry’s claims. See Aerus L.L.C. v. Pro Team, Inc., No. 3:04-cv-1985-M, 2005 WL
1131093 (N.D. Tex. May 9, 2005) (“If enforcement of a provision in [an agreement with a forum selection clause] is
… a defense to a claim, that claim involves a right or remedy under the contract and should fall within the scope of
the forum selection clause.”); Pinnacle Interior Elements, Ltd. v. Panalpina, Inc., 3:09-cv-0430-G, 2012 WL
445927, at *5 (N.D. Tex. Feb. 9, 2010) (“When the plaintiff raises tort claims, the applicability of a contractual
forum-selection clause to those claims depends on whether resolution of the claims relates to interpretation of the
contract.”).

DEFENDANT GIANT EAGLE, INC.’S MOTION TO DISMISS FOR COLLATERAL ESTOPPEL
OR, IN THE ALTERNATIVE, PURSUANT TO THE GOVERNING FORUM SELECTION CLAUSE                                   PAGE 16
A0927450.9/234716.docx


                                                                                                               R045
                                  IV.    CONCLUSION

         Perry is collaterally estopped from bringing this case against Giant Eagle (and the

Shapiras) in Texas. Even though the Petition does not allege a breach of the SP Agreements,

resolution of Perry’s claims will require a court to construe the parties’ respective rights and

obligations under those Agreements. As previously held by the U.S. District Court for the

Northern District of Texas, the mandatory forum selection clause in the SP Agreements applies,

and Perry can only pursue these claims against Giant Eagle (and the Shapiras) in Allegheny

County, Pennsylvania. This case should be dismissed.

                                                    Respectfully Submitted,


                                                        /s/ Orrin L. Harrison III
                                                    Orrin L. Harrison III
                                                      Bar No. 09130700
                                                      oharrison@ghetrial.com
                                                    GRUBER HURST ELROD JOHANSEN
                                                    HAIL SHANK, LLP
                                                    1445 Ross Avenue, Suite 2500
                                                    Dallas, TX 75202
                                                    Telephone: 214-855-6828
                                                    Fax: 214-855-6808

                                                               -and-

                                                    Bernard Marcus
                                                      marcus@marcus-shapira.com
                                                    Scott Livingston
                                                      livingston@marcus-shapira.com
                                                    Jonathan Marcus
                                                      jmarcus@marcus-shapira.com
                                                    MARCUS & SHAPIRA LLP
                                                    301 Grant Street, 35th Floor
                                                    One Oxford Centre
                                                    Pittsburgh, Pennsylvania 15219-6401
                                                    Telephone: 412-338-5200
                                                    Fax: 412-391-8758

                                                    Attorneys for Giant Eagle, Inc., David
                                                    Shapira, and Daniel Shapira
DEFENDANT GIANT EAGLE, INC.’S MOTION TO DISMISS FOR COLLATERAL ESTOPPEL
OR, IN THE ALTERNATIVE, PURSUANT TO THE GOVERNING FORUM SELECTION CLAUSE                  PAGE 17
A0927450.9/234716.docx


                                                                                             R046
                                CERTIFICATE OF SERVICE

         The undersigned certifies that a copy of the foregoing instrument was served upon the

attorneys of record in the above cause via electronic filing and E-Mail, in accordance with Rule

21a, Texas Rules of Civil Procedure, on July 15, 2015.

Michael P. Lynn                                  Ken Carroll
 mlynn@lynnllp.com                                kcarroll@ccsb.com
Jeremy A. Fielding                               Bryan Erman
 jfielding@lynnllp.com                            berman@ccsb.com
Andres Correa                                    Sara Romine
 acorrea@lynnllp.com                              sromine@ccsb.com
Lynn Tillotson Pinker & Cox, LLP                 Carrington, Coleman, Sloman & Blumenthal, LLP
2100 Ross Avenue, Suite 2700                     901 Main Street, Suite 5500
Dallas, TX 75201                                 Dallas, Texas 75202
Counsel for Plaintiffs                           Counsel for Defendants Brandon Logsdon and Jim
                                                 Mills
Lisa S. Gallerano                                Robert Wagstaff
 lgallerano@akingump.com                           rwagstaff@mcmahonlawtx.com
Patrick O’Brien                                  Paul L. Cannon
 obrien@akingump.com                              pcannon@mcmahonlawtx.com
Akin Gump Strauss Hauer & Feld LLP               McMahon Surovik Suttle, PC
1700 Pacific Avenue, Suite 4100                  400 Pine Street, Suite 800
Dallas, Texas 75201-4624                         Abilene, Texas 79601
Counsel for Defendant Alliance Data Systems,     Counsel for Defendants Randy Nicholson and Auto-
Inc.                                             Gas

                                               /s/ Orrin L. Harrison III
                                            Orrin L. Harrison III




DEFENDANT GIANT EAGLE, INC.’S MOTION TO DISMISS FOR COLLATERAL ESTOPPEL
OR, IN THE ALTERNATIVE, PURSUANT TO THE GOVERNING FORUM SELECTION CLAUSE                 PAGE 18
A0927450.9/234716.docx


                                                                                             R047
                                        EXHIBIT 1

            Excentus Corp. v. Giant Eagle, Inc., 3:11-cv-03331,
           2012 WL 2525594 (N.D. Tex. July 2, 2012) (Boyle, J.)




Defendant Giant Eagle's Motion to Dismiss                           Page 19



                                                                  R048
Excentus Corp. v. Giant Eagle, Inc., Not Reported in F.Supp.2d (2012)
2012 WL 2525594

                                                               technology in support of Giant Eagle's efforts to design
                                                               a loyalty rewards program for Giant Eagle grocery stores.
                  2012 WL 2525594
                                                               These types of programs, increasingly common across the
    Only the Westlaw citation is currently available.
                                                               country, provide grocery store or other retail establishment
             United States District Court,
                                                               customers with discounts at gasoline stations, gift cards,
                     N.D. Texas,
                                                               or other types of rewards. Pursuant to these discussions,
                   Dallas Division.
                                                               the parties entered into a Software License and General
        EXCENTUS CORPORATION, Plaintiff,                       Services Agreement (“Software License”) in 2002 and a
                         v.                                    later Addendum in 2010. Through the Software License,
         GIANT EAGLE, INC., David Shapira,                     Excentus provided computer software that Giant Eagle uses
                                                               in its “fuelperks!” program, which is Giant Eagle's specific
           and Daniel Shapira, Defendants.
                                                               gas-grocery cross-marketing program using fuel discounts as
                Civil Action No. 3:11–CV–                      consumer loyalty rewards.
               3331–B. | July 2, 2012.
                                                               The parties' relationship expanded over time as Giant Eagle
Attorneys and Law Firms                                        invested in Excentus twice in 2004 and 2005 through its
                                                               Stock Purchase Agreements, becoming one of Excentus'
Brett C. Govett, Karl G. Dial, Fulbright & Jaworski, Dallas,   largest shareholders and gaining two seats on Excentus' Board
TX, for Plaintiff.
                                                               of Directors. 1 Unfortunately, relations between the parties
Orrin Lea Harrison, III, Patrick G. O'Brien, Akin Gump         eventually deteriorated due to Excentus' claims that Giant
Strauss Hauer & Feld, Dallas, TX, Bernard D. Marcus,           Eagle failed to properly support Excentus' current and future
Brian C. Hill, Scott D. Livingston, Marcus & Shapira LLP,      business plans as required by the parties' Stock Purchase
Pittsburgh, PA, for Defendants.                                Agreements and also failed to obtain a license to Excentus'
                                                               patents for use in Giant Eagle's fuelperks! program and failed
                                                               to pay for such license. Excentus now asserts claims against
                                                               Giant Eagle and the Shapiras, directors or officers of both
       MEMORANDUM OPINION AND ORDER
                                                               Giant Eagle and Excentus, for breach of duties of loyalty
JANE J. BOYLE, District Judge.                                 and good faith, patent infringement, and unfair competition.
                                                               Excentus also seeks declaratory judgement regarding whether
 *1 Before the Court are the Motions to Dismiss for Improper   Giant Eagle has a license to the patents at issue pursuant
Venue, Lack of Personal Jurisdiction, and Failure to Plead     to the parties' Software License. Giant Eagle now seeks
a Legally Sufficient Claim filed by Defendants Giant Eagle,    dismissal of Excentus' claims for improper venue, lack of
Inc. (“Giant Eagle”) (doc. 24) and David and Daniel Shapira    personal jurisdiction, and failure to state a claim upon which
(the “Shapiras”) (doc. 27), both filed January 31, 2012.       relief may be granted. Specifically, Giant Eagle argues that
For the reasons listed below, the Court finds that venue       venue is improper due to forum selection clauses contained
is improper and therefore DISMISSES Excentus' Second           in contracts between the parties, Defendants have insufficient
Amended Complaint (“SAC”) without prejudice to refiling in     contacts with Texas that would subject them to personal
a court of proper venue.                                       jurisdiction in this Court, and Defendants are relieved from
                                                               any liability pursuant to the parties' various contracts.


                             I.
                                                                                            II.
                    BACKGROUND
                                                                                  LEGAL STANDARD
This case concerns tort claims stemming from a soured
business relationship between the parties. Starting in 2001,    *2 Federal Rule of Civil Procedure 12(b)(3) (“Rule 12(b)
the parties began discussing a project whereby Excentus        (3)”) provides for the dismissal of civil actions for improper
Corporation (“Excentus”) would provide Giant Eagle with        venue. In relevant part, 28 U.S.C. § 1391(b) states that a



              © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                        1
 Defendant Giant Eagle's Motion to Dismiss                                                                              Page 20
                                                                                                                      R049
Excentus Corp. v. Giant Eagle, Inc., Not Reported in F.Supp.2d (2012)
2012 WL 2525594

civil action may be brought in “a judicial district in which
a substantial part of the events or omissions giving rise to
the claim occurred.”A motion to dismiss for improper venue           i. Enforceability of the Forum Selection Clause.
requires that the facts be viewed in the light most favorable to     “[A] forum selection clause is prima facie valid and should
the plaintiff.Ambraco, 570 F.3d at 237–38 (citation omitted).        be enforced unless the resisting party shows that enforcement
Moreover, “ ‘the court is permitted to look at evidence in the       would be unreasonable.”Seattle–First Nat'l Bank v. Manges,
record beyond simply those facts alleged in the complaint and        900 F.2d 795, 799 (5th Cir.1990) (citing M/S Bremen v.
                                                                     Zapata Off–Shore Co., 407 U.S. 1, 10, 92 S.Ct. 1907, 32
its proper attachments.’ ”Id. at 238 (citation omitted). 2
                                                                     L.Ed.2d 513 (1972)). Federal law governs whether forum
                                                                     selection clauses are enforceable.Von Graffenreid v. Craig,
                                                                     246 F.Supp.2d 553, 560 (N.D.Tex.2003) (citing Haynsworth
                               III.                                  v. Corp., 121 F.3d 956, 962 (5th Cir.1997)). Under Fifth
                                                                     Circuit precedent, courts are to presumptively enforce forum
                                                                     selection clauses with few exceptions. See Haynsworth, 121
                          ANALYSIS
                                                                     F.3d at 962–63. The presumption can only be overcome by
Giant Eagle moves the Court to dismiss the case for improper         a clear showing that the clause is unreasonable under the
venue, alleging that venue is not proper in the Northern             circumstances. Id. at 963.The party resisting the enforcement
District of Texas because of forum selection clauses in two          bears the “heavy burden” of showing that one of the following
of the contracts between the parties. Specifically, Giant Eagle      makes the clause unreasonable: “(1) the incorporation of the
argues that its Stock Purchase Agreements with Excentus              forum selection clause into the agreement was the product
granted it a full license to use any and all Excentus intellectual   of fraud or overreaching; (2) the party seeking to escape
property and its purported obligations that it allegedly failed      enforcement ‘will for all practical purposes be deprived of his
to meet arose out of the Stock Purchase Agreements, and              day in court’ because of the grave inconvenience or unfairness
therefore the forum selection clauses in the Stock Purchase          of the selected forum; (3) the fundamental unfairness of the
Agreements are applicable. In response, Excentus argues that         chosen law will deprive the plaintiff of a remedy; or (4)
the two contracts containing these forum selection clauses           enforcement of the forum selection clause would contravene
have nothing to do with its claims in this case and therefore        a strong public policy of the forum state.”Id. (citing Carnival
the forum selection clauses are inapplicable in this case.           Cruise Lines, Inc. v. Shute, 499 U.S. 585, 595, 111 S.Ct. 1522,
                                                                     113 L.Ed.2d 622 (1991); M/S Bremen, 407 U.S. at 12–13, 15,
The parties' Stock Purchase Agreements set forth as follows:         17, 18).

             8.06 GOVERNING LAW; VENUE.                               *3 Excentus does not argue that any of the foregoing factors
             This agreement shall be governed by                     render the forum clauses unreasonable, focusing instead on its
             and construed in accordance with the                    contention that the forum selection clauses are inapplicable to
             laws of the State of Texas without                      its claims. Nevertheless, the Court finds that it is neither unfair
             giving effect to the conflict of laws                   nor unreasonable to require the party initiating litigation to
             rules or choice of laws rules thereof                   sue in the county of the respondent, as agreed to by the parties,
             or of any state. Venue for any                          which evidences the parties' apparent desire to discourage
             action arising out of this agreement                    litigation. See Abbott Labs. v. Takeda Pharm. Co., 476 F.3d
             shall reside exclusively in the county                  421, 422 (7th Cir.2007) (“The purpose of specifying two
             in which the respondent's principal                     forums in this way is to discourage either side from instituting
             offices are located.                                    litigation, because whoever sues must litigate on the other
                                                                     party's turf.”) The Court also notes that the contracts appear to
Giant Eagle Mot.App. 53, 89. 3 Giant Eagle is located in             have been negotiated at arm's length and there is no indication
Allegheny County, Pennsylvania, and Giant Eagle argues               of fraud. The Court further finds that litigating Excentus'
that, given its reliance on the Stock Purchase Agreements as         claims in Pennsylvania will not deprive Excentus of its day
a defense to Excentus' claims, these claims must be brought          in court or any legal remedy, and enforcement of the forum
in Allegheny County. The Court will first look to whether the        selection clause does not contravene a strong public policy of
forum selection clauses at issue are enforceable and then to         any state. See Haynsworth, 121 F.3d at 963. Accordingly, the
whether such clauses apply to Excentus' claims in this case.


              © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                                   2
 Defendant Giant Eagle's Motion to Dismiss                                                                                         Page 21
                                                                                                                                 R050
Excentus Corp. v. Giant Eagle, Inc., Not Reported in F.Supp.2d (2012)
2012 WL 2525594

Court finds that the forum selection clauses contained in the      allegations that Giant Eagle “gained an unfair advantage in
                                                         4         the market by capitalizing on Excentus' efforts and success
Stock Purchase Agreements are valid and enforceable.
                                                                   in its fuel discount systems by infringing its patents ... which
                                                                   are acts that constitute unfair competition under the common
ii. Does the Forum Selection Clause Apply in This Case?            law ...,” SAC ¶¶ 64–65, and the complaint's allegation that
Having found that the forum selection clauses are valid, the       the Shapiras breached their fiduciary duty to Excentus by
Court must determine whether they apply to Excentus' claims        claiming that the Software License “granted Giant Eagle a
in this case. Giant Eagle points to several provisions of the      license to the Excentus Patents,” SAC ¶ ¶ 30, 33.
Stock Purchase Agreements to argue that the forum selection
clauses apply. Specifically, Giant Eagle points to ¶ 3.09(d)        *4 In response, Excentus argues that its tort claims fall
of both Agreements, in which Excentus represented that             outside the scope of the forum selection clauses because its
“none of the Intellectual Property currently sold or licensed      claims do not involve an interpretation of the Stock Purchase
by [Excentus] to any Person ... infringes upon or otherwise        Agreements, and it also argues that none of the elements of its
violates any Intellectual Property rights of others.”See Giant     claims “arise out of” the Stock Purchase Agreements. In its
Eagle Mot.App. 36, 73. Giant Eagle also points to ¶ 7.01(a) of     view, it may “prove and prevail on all of its tort claims against
both Agreements, in which Excentus fully indemnified Giant         Giant Eagle without reference to, or interpretation of, the
Eagle for any claim arising out of “any misrepresentation or       Stock Purchase Agreements.” 6 Pl.'s Resp. Giant Eagle Mot.
breach of [this] warranty” by Excentus. Id. at App. 49, 86–        6. Excentus further argues that forum selection clauses “do
87. Giant Eagle further argues that the patents now claimed        not apply when the alleged nexus between the action and the
to have been infringed, U.S. Patent Nos. 6,321,984 (the
                                                                   contract arises only with respect to a claimed defense.” 7 Id.
“#984 Patent”); 6,332,128 (the ′128 Patent); and 7,383,204
                                                                   at 8 (citing Philips v. Audio Active Ltd., 494 F.3d 378, 391–
(the “#204 Patent”), were issued or were based on claimed
                                                                   92 (2d Cir.2007)).
technology that existed and was disclosed before Excentus
represented that none of its technology infringed any other
                                                                   The Court finds that the Stock Purchase Agreements' forum
patents. It also argues that Excentus' representation included
                                                                   selection clauses are applicable in this case, and therefore
the technology that Excentus licensed to Giant Eagle under
                                                                   venue is improper. The Court first notes that whether a
the Software License. In its view, Excentus' warranty of non-
                                                                   forum selection clause applies to a plaintiff's claims is a case-
infringement and indemnification includes the ′984, ′ 128, and
                                                                   specific inquiry. See, e.g., Terra Int'l, Inc. v. Miss. Chem.
′204 Patents, which were acquired by Excentus from Auto            Corp., 119 F.3d 688, 694 (8th Cir.1997). Without deciding
Gas in 2008. Giant Eagle also notes ¶ 5.06 of the 2004 Stock
                                                                   whether the Stock Purchase Agreements do in fact grant Giant
Purchase Agreement, which granted Giant Eagle “the non-
                                                                   Eagle a license to Excentus' patents and are a defense to
exclusive right to license [Excentus'] Products and to establish
                                                                   the breach of duty of loyalty and unfair competition claims,
retail/gas station alliances utilizing [Excentus'] Products in
                                                                   Giant Eagle's defense requires the Court to interpret the
any market in which [Giant Eagle] operates as of or after
                                                                   Stock Purchase Agreements. As explained by the court in
the Closing Date.” 5 Giant Eagle Mot.App. 47–48. “Products”        Aerus L.L.C. v. Pro Team, Inc., No. 3:04–cv–1985–M, 2005
are defined in the Stock Purchase Agreement as “the                WL 1131093 (N.D.Tex. May 9, 2005), “[i]f enforcement
technology which [Excentus] has licensed to [Giant Eagle] ...      of a provision in [an agreement with a forum selection
and all improvements and enhancements thereto, and the             clause] is ... a defense to a claim, that claim involves a
Company's Reward Marketing Engine software module.”Id.             right or remedy under the contract and should fall within
at 48, 84–85.Under these terms, Giant Eagle argues, “the           the scope of the forum selection clause.”Id. at *8 (citing
2004 Stock Purchase Agreement gave Giant Eagle the right           Penn, L.L.C. v. New Edge Network, Inc., No. 03 C 5496,
to use whatever Excentus technology—including patented             2003 WL 22284208, *2 (N.D.Ill. Oct. 3, 2003)); see also
technology—it needed for its fuelperks! program.”Giant             Pinnacle Interior Elements, Ltd. v. Panalpina, Inc., No. 3:09–
Eagle Mot. Br. 7. In its view, it has a license granted            cv–0430–G, 2010 WL 445927, *5 (N.D.Tex. Feb.9, 2010)
under the Stock Purchase Agreements, and such license is           (“When the plaintiff raises tort claims, the applicability of a
a complete defense to the patent infringement claims. Giant        contractual forum-selection clause to those claims ‘depends
Eagle also argues that Excentus' breach of duty of loyalty         on whether resolution of the claims relates to interpretation
claims and unfair competition claims are also barred by            of the contract.’”) (citations omitted). The Aerus court found
such alleged license, given the Second Amended Complaint's         that the defendant's defense to a patent infringement claim


              © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                               3
 Defendant Giant Eagle's Motion to Dismiss                                                                                     Page 22
                                                                                                                             R051
Excentus Corp. v. Giant Eagle, Inc., Not Reported in F.Supp.2d (2012)
2012 WL 2525594

                                                                      *5 The Court reiterates that its finding that the forum
was based on a contract containing a forum selection clause,
                                                                     selection clause is applicable does not resolve the
and therefore “the allegations in this claim [had] a ‘direct or
                                                                     issue of whether the Stock Purchase Agreements are in
indirect connection, link or association with, or relation to”
                                                                     fact valid defenses to Excentus' claims. However, such
that contract containing the forum selection clause. Aerus,
                                                                     determination requires the Court to examine the Stock
2005 WL 1131093, at *8 (citing Smith v. Lucent Techs., Inc.,
                                                                     Purchase Agreements, thereby invoking the forum selection
No. Civ.A. 02–0481, 2004 WL 515769, *11 (E.D.La. Mar.16,
                                                                     clauses found in these Agreements. Accordingly, venue is
2004)). Accordingly, the court found the forum selection
                                                                     not proper in the Northern District of Texas, and Excentus'
applicable to the patent infringement claim, and it later found
                                                                     Second Amended Complaint is hereby DISMISSED for
that the forum selection clause was also applicable to the
                                                                     improper venue.
plaintiffs' other claims, including its unfair competition claim.

Here, the Court must look to the Stock Purchase Agreements
to determine whether Giant Eagle's defenses are valid, and                                         IV.
therefore the forum selection clauses contained in them are
applicable. Excentus' claims do not rely on the Stock Purchase
                                                                                            CONCLUSION
Agreements, but resolution of these claims clearly requires
the Court to construe the Stock Purchase Agreements, given           For the reasons discussed above, the Court finds that venue
Giant Eagle's reliance on the Agreements as a defense. 8 See         is improper in the Northern District of Texas and GRANTS
Pinnacle Interior Elements, 2010 WL 445927, at *5. Further,          Giant Eagle's and the Shapiras' Motions (docs.24, 27) to the
the Court must look to the Stock Purchase Agreements in              extent they seek dismissal of Excentus' Second Amended
order to resolve all of Excentus' claims, given that they            Complaint under Rule 12(b)(3). The Second Amended
involve Giant Eagle's obligations under the Stock Purchase           Complaint is hereby DISMISSED.This dismissal is without
Agreements, 9 whether Giant Eagle had a license to the               prejudice to refiling in a court of proper venue. 11
patents at issue, or whether such purported license is a defense
to Excentus' claims. Accordingly, the Court finds both that          SO ORDERED.
the forum selection clause of the Stock Purchase Agreements
applies to all of Excentus' claims and also that venue is
                                                                     All Citations
improper as to all of these claims. 10
                                                                     Not Reported in F.Supp.2d, 2012 WL 2525594


Footnotes
1       Although not directly referred to in the Second Amended Complaint, the Stock Purchase Agreements by which Giant
        Eagle gained seats on Excentus' Board of Directors are referred to indirectly. See SAC ¶¶ 13–15. Further, a court may
        look at evidence outside of the complaint in resolving a motion to dismiss for improper venue. See, e.g., Ambraco, Inc.
        v. Bossclip B.V., 570 F.3d 233, 237–38 (5th Cir.2009). Accordingly, the Court looks to the Stock Purchase Agreements
        and other documents in addition to the documents attached to the Second Amended Complaint in resolving Defendants'
        Motions to Dismiss for Improper Venue.
2       Although courts have not been consistent as to which party bears the burden of proof on a Rule 12(b)(3) motion for
        improper venue, several of them have found that the burden of proving that venue is proper lies with the plaintiff. See,
        e.g., Inst. for Creation Research Graduate Sch. v. Paredes, No. 3–09–cv–693–B, 2009 WL 4333366, *2 (N.D.Tex. Dec.1,
        2009); Tracfone Wireless, Inc. v. Carson, No. 3:07–cv1761–G, 2008 WL 4107584, *7 (N.D.Tex. Aug.28, 2008); Psarros
        v. Avior Shipping, Inc., 192 F.Supp.2d 751, 753 (S.D.Tex.2002); Advanced Dynamics Corp. v. Mitech Corp., 729 F.Supp.
        519, 519 (N.D.Tex.1990). The Court also notes the opinion of 5 Charles Alan Wright, Arthur R. Miller, and Edward H.
        Cooper, Federal Practice and Procedure § 3826 (3d ed. 2007) (“The federal courts are divided on which party bears
        the burden on a motion to dismiss for improper venue.... But what has been characterized as ‘the better view,’ and the
        position that probably represents the weight of judicial authority, is that, when an objection has been raised, the burden
        is on the plaintiff to establish that the district he or she has chosen is a proper venue.... This approach is consistent with
        the plaintiff's threshold obligation to show that the case belongs in the particular district court in which suit has been
        instituted.”) (citations omitted).



              © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                                 4
 Defendant Giant Eagle's Motion to Dismiss                                                                                       Page 23
                                                                                                                               R052
Excentus Corp. v. Giant Eagle, Inc., Not Reported in F.Supp.2d (2012)
2012 WL 2525594

3     This provision is identical in both of the Stock Purchase Agreements and is numbered § 8.06 in both.
4     The Court also finds that the forum selection clauses contained in the Stock Purchase Agreements are mandatory, rather
      than permissive, given that the clauses state that venue “shall reside exclusively in the county in which the respondent's
      principal offices are located.”(emphasis added).See, e.g., Von Graffenreid, 246 F.Supp.2d at 560 (“Where the [forum
      selection clause] contains clear language showing that jurisdiction is appropriate only in a designated forum, the clause
      is mandatory.”) (citations omitted).
5     The 2005 Stock Purchase Agreement contains an identical provision. Giant Eagle Mot.App. 84–85.
6     As noted by Giant Eagle, though, Excentus does rely on, inter alia, the Stock Purchase Agreements in arguing that this
      Court has both general and specific jurisdiction with respect to Excentus' claims against Giant Eagle.
7     Excentus also argues that the February 2010 Addendum to the Software License “makes it clear that Giant Eagle has
      no license to the Excentus patents” and the purported warranty of noninfringement does not provide a defense because
      “the warranty given expired 18 months after the closing date, and the software Excentus licensed does not contain all
      the elements for infringement of the patents Excentus acquired years later.”Pl.'s Resp. Giant Eagle Mot. 9–10.
8     The Court notes the Phillips court's finding that a forum selection clause, contained in a contract that was relevant only
      as a defense, was without effect, Phillips, 494 F.3d at 391, but finds persuasive the warning of the court in Penn, L.L.C.
      v. New Edge Network, Inc., No. 03 C 5496, 2003 WL 22284207 (N.D.Ill. Oct.3, 2002) which found that such a rule would
      allow a “clever party” to “simply avoid its contractual obligations through sophistry.”Id. at *2. The Court further notes that
      the basis for the Phillips court's ruling, a narrow interpretation of phrases such as “arising out of,” has been rejected by
      some courts. See, e.g., Appliance Zone, LLC v. NexTag, Inc., 2009 WL 5200572, *6 (S.D.Ind.2009) (noting that both the
      Seventh and Ninth Circuits interpreted “arising out of” more broadly than the Second Circuit) (citations omitted).
9     As stated previously, at least some of the obligations allegedly not met by the Shapiras were allegedly assumed by Giant
      Eagle at the time of the Stock Purchase Agreements. See, e.g., SAC ¶ 15 “As part of the investment in Excentus, Giant
      Eagle committed to suport Excentus' current and future business and plans.”).
10    The Court also finds the Shapiras may invoke the forum selection clause of the Stock Purchase Agreements given the
      relatedness of the Shapiras to the dispute between Excentus and Giant Eagle. See Excel Mktg. Solutions Inc. v. Direct
      Fin. Solutions LLC, 2011 WL 1833022, at *6 (N.D.Tex. May 13, 2011) (“A nonparty can be bound to a forum selection
      clause if the nonparty is ‘closely related to the dispute such that it becomes foreseeable that it will be bound.”) (citing,
      inter alia, Hugel v. Corp. of Lloyds, 999 F.2d 206 (7th Cir.1993)). Indeed, the complaint itself explains that “the actions
      of the Shapiras described herein constitute the acts of Giant Eagle” and “[r]eference to Giant Eagle is reference to these
      acts.”SAC ¶ 28. Accordingly, venue is improper as to the Shapiras as a result of the forum selection clause contained in
      the Stock Purchase Agreements, for the reasons discussed above.
11    Given that the Court has dismissed the Second Amended Complaint under Rule 12(b)(3), the Court does not express an
      opinion on Defendants' contention that dismissal is also proper for lack of personal jurisdiction over all Defendants and
      for failure to state a claim upon which relief can be granted.


End of Document                                                © 2015 Thomson Reuters. No claim to original U.S. Government Works.




              © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                               5
 Defendant Giant Eagle's Motion to Dismiss                                                                                     Page 24
                                                                                                                            R053
                                        EXHIBIT 2

               Software License and General Services Agreement




Defendant Giant Eagle's Motion to Dismiss                          Page 25



                                                                 R054
     Case 3:11-cv-03331-B Document 26-2 Filed 01/31/12   Page 2 of 23 PageID 363




Defendant Giant Eagle's Motion to Dismiss                                          Page 26
                                                                                        App. 8
                                                                                   R055
     Case 3:11-cv-03331-B Document 26-2 Filed 01/31/12   Page 3 of 23 PageID 364




Defendant Giant Eagle's Motion to Dismiss                                          Page 27
                                                                                        App. 9
                                                                                   R056
     Case 3:11-cv-03331-B Document 26-2 Filed 01/31/12   Page 4 of 23 PageID 365




Defendant Giant Eagle's Motion to Dismiss                                          PageApp.
                                                                                        28 10

                                                                                   R057
     Case 3:11-cv-03331-B Document 26-2 Filed 01/31/12   Page 5 of 23 PageID 366




Defendant Giant Eagle's Motion to Dismiss                                          PageApp.
                                                                                        29 11

                                                                                   R058
     Case 3:11-cv-03331-B Document 26-2 Filed 01/31/12   Page 6 of 23 PageID 367




Defendant Giant Eagle's Motion to Dismiss                                          PageApp.
                                                                                        30 12

                                                                                   R059
     Case 3:11-cv-03331-B Document 26-2 Filed 01/31/12   Page 7 of 23 PageID 368




Defendant Giant Eagle's Motion to Dismiss                                          PageApp.
                                                                                        31 13

                                                                                   R060
     Case 3:11-cv-03331-B Document 26-2 Filed 01/31/12   Page 8 of 23 PageID 369




Defendant Giant Eagle's Motion to Dismiss                                          PageApp.
                                                                                        32 14

                                                                                   R061
     Case 3:11-cv-03331-B Document 26-2 Filed 01/31/12   Page 9 of 23 PageID 370




Defendant Giant Eagle's Motion to Dismiss                                          PageApp.
                                                                                        33 15

                                                                                   R062
    Case 3:11-cv-03331-B Document 26-2 Filed 01/31/12   Page 10 of 23 PageID 371




Defendant Giant Eagle's Motion to Dismiss                                          PageApp.
                                                                                        34 16

                                                                               R063
    Case 3:11-cv-03331-B Document 26-2 Filed 01/31/12   Page 11 of 23 PageID 372




Defendant Giant Eagle's Motion to Dismiss                                          PageApp.
                                                                                        35 17

                                                                               R064
    Case 3:11-cv-03331-B Document 26-2 Filed 01/31/12   Page 12 of 23 PageID 373




Defendant Giant Eagle's Motion to Dismiss                                          PageApp.
                                                                                        36 18

                                                                               R065
    Case 3:11-cv-03331-B Document 26-2 Filed 01/31/12   Page 13 of 23 PageID 374




Defendant Giant Eagle's Motion to Dismiss                                          PageApp.
                                                                                        37 19

                                                                               R066
    Case 3:11-cv-03331-B Document 26-2 Filed 01/31/12   Page 14 of 23 PageID 375




Defendant Giant Eagle's Motion to Dismiss                                          PageApp.
                                                                                        38 20

                                                                               R067
    Case 3:11-cv-03331-B Document 26-2 Filed 01/31/12   Page 15 of 23 PageID 376




Defendant Giant Eagle's Motion to Dismiss                                          PageApp.
                                                                                        39 21

                                                                               R068
    Case 3:11-cv-03331-B Document 26-2 Filed 01/31/12   Page 16 of 23 PageID 377




Defendant Giant Eagle's Motion to Dismiss                                          PageApp.
                                                                                        40 22

                                                                               R069
    Case 3:11-cv-03331-B Document 26-2 Filed 01/31/12   Page 17 of 23 PageID 378




Defendant Giant Eagle's Motion to Dismiss                                          PageApp.
                                                                                        41 23

                                                                               R070
    Case 3:11-cv-03331-B Document 26-2 Filed 01/31/12   Page 18 of 23 PageID 379




Defendant Giant Eagle's Motion to Dismiss                                          PageApp.
                                                                                        42 24

                                                                               R071
    Case 3:11-cv-03331-B Document 26-2 Filed 01/31/12   Page 19 of 23 PageID 380




Defendant Giant Eagle's Motion to Dismiss                                          PageApp.
                                                                                        43 25

                                                                               R072
    Case 3:11-cv-03331-B Document 26-2 Filed 01/31/12   Page 20 of 23 PageID 381




Defendant Giant Eagle's Motion to Dismiss                                          PageApp.
                                                                                        44 26

                                                                               R073
    Case 3:11-cv-03331-B Document 26-2 Filed 01/31/12   Page 21 of 23 PageID 382




Defendant Giant Eagle's Motion to Dismiss                                          PageApp.
                                                                                        45 27

                                                                               R074
    Case 3:11-cv-03331-B Document 26-2 Filed 01/31/12   Page 22 of 23 PageID 383




Defendant Giant Eagle's Motion to Dismiss                                          PageApp.
                                                                                        46 28

                                                                               R075
    Case 3:11-cv-03331-B Document 26-2 Filed 01/31/12   Page 23 of 23 PageID 384




Defendant Giant Eagle's Motion to Dismiss                                          PageApp.
                                                                                        47 29

                                                                               R076
                                        EXHIBIT 3

              2004 Series A Preferred Stock Purchase Agreement




Defendant Giant Eagle's Motion to Dismiss                          Page 48



                                                                 R077
     Case 3:11-cv-03331-B Document 26-3 Filed 01/31/12                         Page 2 of 38 PageID 386
                                  ,f::~--                                        r"
                                  t,                                            (,




                     SERIES A PREFERRED STOCK PURCHASE AGREEMENT

              This Series A Preferred Stock Purchase Agreement (this "Agreemenf') is made and
      entered into as of August 6, 2004 by and between CCISTech, Inc" a Texas corporation (the
      "Company"), and Giant Eagle of Delaware, Inc" a Delaware corporation (the "Investor"). Each
      of the Company and the Investor may be referred to herein as a "Party," and collectively as the
      ~~Parties. "



              WHEREAS, the Company desires to sell to the Investor, and the Investor desires to
       purchase from the Company, 83,334 shares (the "Pnrchased Shares") of the Company's Series
       A Preferred Stock, par value $0.01 per share (the "Series A Preferred Stock"), which Purchased
       Shares shall have the rights, preferenCeS, privileges and restrictions set forth in the Certificate of
       Designation of the Compaily attached to this Agreement as Exhibit A (the "Certificate of
       Designation''), on the terms and conditions set forth in this Agreement.

              NOW. THEREFORE, in consideration of the mutual promises and covenants set forth
       herein and for other g<lOd and valuable consideration, the reCeipt and sufficiency OC which are
       hereby acknowledged, the Parties hereby agree as follows:

                                           ARTICLE I
                             AGREEMENT TO PURCHASE AND SELL STOCK

               1.01 Authorization. As of the Closing Date (as defined belOW), the Company will have
       authorized the issuance, pursuant to the tenos and conditions of this Agreement, of the Purchased
       Shares.

              1.02 Agreement to Purchase and Sell. The Company agrees to sell to the Investor at
       the Closing, and ihe Investor agrees to purchase from the Company at the Closing, the' Purchased
       Shares at a price of $36.00 per share for an aggregate price of $3,000,024 (the "Purchase
       Price"). The shares of Common Stock (as defined below) issuable and that are issued upon
       conversion of the Purchased Shares will be hereinafter referred to as the "Conversion Shares".

                                                   ARTICLE II
                                                    CLOSING

               2.01 The Closing. The closing of the transactions contemplated by this Agreement
       (the "Closing") will take place at the offices ofFish & Richardson P.C., 1717 Main Street, Suite
       5000, Dallas, Texas 75201, at (i) 10:00 a.m. Central Time, on August 16,2004 or (ii) such other
       date and at such other time and place as the Parties may agree. The date on which the Closing
       occurs is referred to herein as the "Closing Date." At the Closing, the Parties shall deliver or
       cause to be delivered the folIowing:

               (a)     the Company shall deliver oreause to be delivered to the Investor:

                       (i)     a stock certificate representing the Purchased Shares;




                                                         -1-




Defendant Giant Eagle's Motion to Dismiss                                                                       PageApp.
                                                                                                                     49 30

                                                                                                                R078
         Case 3:11-cv-03331-B Document 26-3 Filed 01/31/12                         Page 3 of 38 PageID 387
,                                     r'                                            ('".
                                      I,




                        (li)       a Secretary's Certificate in substantiaUy the form attached hereto as
                  ExhibitB;

                          (iii)    an Officer's Certificate in substantially the form attached hereto as Exhibit
                  C·
                  -,
                           (iv)   any consents set forth on Schedule 3.17, dated prior to the Closing Date,
                   required to be obtained by the Company from third parties in order to eonsummate the
                   transactions eontemplated by this Agreement;

                          (v)     an executed Registration Rights Agreement in the form attached hereto as
                   Exhibit D (the "Registration Rights Agreement");

                          (vi)    a Shareholders Agreement in the form attached hereto as Exhibit E (the
                   "Shareholden Agreement" and together with the Registration Rights Agreement, the
                   "Related Agreements") executed by the Company and each Person (as defined below)
                   who owns in, excess of 5% of the issued and outstanding Common Stock (as defined
                   below) on a fully-diluted basis as of the Closing Daie;

                          '(vii) a legal opinion from Fish & Richardson P.C., counsel to the Company,
                   d&ted as of the Closing Date in the fonn attached hereto as Exhibit F; and

                          (viii) an amendment to the Certificate of Incorporation of the Company in a
            form reasonably acceptable to eounsel for the Investor.

                   (b)     the Investor shaU deliver to the Company;

                            (i)    the Purchase Price, paid by (A) a bank certified or c.ashier's check payable
                   to the Compaoy's order, (ii) wire transfer of inunediately available funds to the Company
                   or (iii) any combination of the foregoing (collectively, "Cash");

                          (ii)     a Secretary's Certificate in substantially the fonn attached hereto as
                   Exhibit G;

                           (iii)   an Officer's Certificate in substantially the form attached hereto as Exhibit
                   H·
                   -,
                           (iii)   an executed Registration Rights Agreement; and

                           (iv)    an executed Shareholders Agreement.




                                                             -2-



~




    Defendant Giant Eagle's Motion to Dismiss                                                                      PageApp.
                                                                                                                        50 31

                                                                                                                   R079
         Case 3:11-cv-03331-B Document 26-3 Filed 01/31/12                       Page 4 of 38 PageID 388
                                     ..... ~".                                    (-.
                                     f
"                                    '.



                                          ARTICLEm
~

                        REPRESENTATIONS AND WARRANTmS OF THE COMPANY

                  To induce the Investor to enter into this Agreement and to consummate the transactions
           contemplated hereby, the Company hereby represents and warrants to the Investor,. as of the
           Closing Date, the following:

                   3.01 Organization and Good Standing. The Company is a corporation dUly organized,
           validly existing, and in good standing under the laws of the State of Texas. Schedule 3.01(a)
           includes (i) a true and complete copy of the Company's Articles of Incorporation and all
           amendments thereto, certified by the Secretary of State of Texas; (ii) a true and complete copy of
           the Bylaws of the Company presently in effect, certified as true and correct by the Company's
           Secretary; and (iii) true and complete copies of certificates of existence and good standing for the
           Company, certified by the Secretary of State of Texas and the Texas Comptroller of Public
           Accounts, respectively, as of the Closing Date .

                   .3.02 Authority; Qualification. The Company has all requisite corporate power and
           authority to own its property, to conduct its business, and to execute and deliver this Agreement
           and the Related Agreements and any instruments and agreements contemplated herein or therein
           that are required to be executed and delivered by the Company pursuant to its obligations
           hereunder and thereunder, and to perform its obligations hereunder and thereunder. TIlls
           Agreement and the Related Agreements have been approved by the Company's Board of
           Directors and have been duly authorized, executed, and delivered by the Company. The
           Company is dUly qualified to do business as a foreign corporation in good standing in all
           jurisdictions in which it is required to be qualified to do intrastate business as the Company's
           business is currently conducted, except for jurisdictions in which failure to so qualifY could not
           reasonably be expected to have a Material Adverse Effect on the Company. All corporate action
           on the pait of the Company's directors and shareholders necessary for (i) the authorization,
           execution, delivery ot; and the performance of all obligations of the Company under this
           Agreement and the Related Agreements; (ii) the authorization, issuance, reservation for issuance
            and delivery of all of the Purchased Shares being sold under this Agreement and of the
            Conversion Shares; and (iii) the filing of the Certificate of Designation has been taken or wiII be
            taken prior to the Closing. TIlls Agreement and the Related Agreements represent the valid and
            binding obligations of the Company, enforceable in accordance with their terms, except as
            limited by applicable bankruptcy, ipsolvency, reorganization, moratoriJUll, and similar laws
            affecting the enforcement of creditors' rights geuerally and the application of general principles
            of equity and judicial discretion. The Company has delivered to the Investor a copy of the
            resolutions of the Company's Board of Directors certified as true and correct by the Company's
            Secretary, approving this Agreement and the Related Agreements and authorizing the execution
            hereof by the Company's president. For purposes of this Agreement, "Material Adverse
            Effect" mealis any effect(s), individually or in the aggregate, that would be materially adverse to
            a Party's assets in an amount of$]O,OOO or more.

                   3.03 No Violation. The Company is not in violation or default of any provisions of its
            organizational documents as amended to date, and is in compliance with all applicable statutes,
            laws, court orders, regulations and executive orders of any Governmental Authorities having


                                                            -3-




    Defendant Giant Eagle's Motion to Dismiss                                                                     PageApp.
                                                                                                                       51 32

                                                                                                                  R080
                 Case 3:11-cv-03331-B Document 26-3 Filed 01/31/12                         Page 5 of 38 PageID 389
                                                                                            ("~
                                             (~
"                                                                                           \




                  jurisdiction over its business or properties, except in the case of statutes, laws, regulations and
                  orders the violation of which would not have a Material Adverse Effect on the Company. The
                  Company has not received any notice of any violation of any such statute, law, regulation or
                  order which has not been remedied prior to the date hereof. Neither the execution and delivery
                   by the Company of this Agreement or the Related Agreements nor the consummation by the
                  Company of the transactions contemplated hereby and thereby will (i) violate any provision of
                  the Texas Business Corporation Act, the Articles of Incorporation of the Company, or the
                  Bylaws of the Company; (ii) except as set forth on Schedule 3.03, violate, or be in conflict with,
                   or constitute a default (or an event or condition that, with notice or lapse of time, or both, would
                   constitute a default) under, or result in the termination of, or accelerate the performance required
                   by, or cause the acceleration of the maturity of any liabilities of the Company, or result in the
                   creation or imposition of any security interest, lien, charge, or other encumbrance upon any of
                   the assets of the Company under, any note, bond, mortgage, indenture, deed of trust, license,
                   lease, contract, committuent, understanding; arrangement, agreement" or restriction of any kind
                   or character to which the Company is a party or by which the CompaJl.Y may Qe bound or
                   affected or to which any of the Company's asse,ts are subject; or (iii) violate any statute or law or
                   any judgment, decree, order, writ, injunction, regulation, or rule of any court or Governmental
                   Authority. For purposes of this Agreement, "Governmental Authority" means any nation or
                   government, any state, regional, local, or other political subdivision thereof, and any entity or
                   official exercising executive, legislative, judicial (including courts), regulatory, or administrative
                    functions of or pertaining to government.

                           3.04 Brokers. The Company has not employed any broker, agent, or finder in
                   connection with any transaction contemplated by this Agreement for which the Investor may be
                   liable or responsiblCl to pay.

                           3.05 Capitalization. The capitalization of the, Company immediate.1y prior to the
                    Closing consists oftha following:

                                  (a)     Common Stock. A total of 5,000,000 authorized shares of Common
                           Stock, par value $0.01 per share (the "Common Stock"), of which 361,233 shares are
                           issued and outstanding.

                                   (b)     Preferred Stock. A total of 1,000,000 authorized shares of preferred stock,
                           par value $0.01 (the "Preferred Stock',), 83,334 of which have been designated as Series
                           A Preferred Stock, and nOne of which will be issued and outstanding. Upon the Closing,
                           the rights, preferences and privileges of the Series A Preferred Stock will be as stated in
                           the Ce11ificate of Designation and as provided by law.

                                   (c)    Options, Warrants. Etc. Except for the (i) conversion rights of the Series
                           A Preferred Stock, and (ii) 91,000 shares of Common Stock reserved for issuance under
                           the Company's 2002 Stock Option Plan (the "Plan',) under which, as of the Closing Date,
                           there are options to purchase 74,750 shares of Common Stock outstanding, there are no
                           outstanding options, warrants, rights (including conversion or preemptive rights) or
                           agreements for the purchase Or acquisition from the Company of any shares of its capital
                           stock or any securities convertible into or ultimately exchangeable or exercisable for any



                                                                     -4-



    [,..)




            Defendant Giant Eagle's Motion to Dismiss                                                                       PageApp.
                                                                                                                                 52 33

                                                                                                                            R081
           Case 3:11-cv-03331-B Document 26-3 Filed 01/31/12                        Page 6 of 38 PageID 390
                                        /."--,
                                       tI.                                            c
                     shares of the Company's capital stock. Except as set forth on Schedule 3.05(c), no shares
                     of the Company's outstanding capital stock are subject to any rights of first refusal or
                     other rights to purchase such stock (whether in favor of the Company or any other
                     Person), pursuant to any agreement or commitment of the Company. For the purposes of
                     this Agreement, "Person" shall have the meaning given in Section 3(a)(9) of the
                     Securities Exchange Act of 1934, as amended, as modified and used in Sections 13(d)(3)
                     and 14(d)(2) of such act.

                              (d)    Valid Issuance. The outstanding shares of the capital stock of the
                     Company are duly authorized and validly issued, fully paid and nonassessable, and have
                     been approved by all requisite shareholder and board action. A description of all
                     issuances and grants by the Company prior to the Closing of any capital stock,
                     convertible securities, rights, warrants, or options of the Company is set forth on
                     Schedule 3.05(d). The offer and sale by the Company of all capital stock, convertible
                     securities, rigbts, warrants, or options of the Company issued prior to the Closing was
                     conducted in compliimt;e with all applicable federal and siate securities laws, and to the
                     Knowledge (as defined below) of the Company, no holder of any such securities has a
                     right oftescission or has made or threatened to make a claim for rescission or damages
                     with respect thereto. For purposes of this Agreement, a Party shall be deemed to have
                     "Knowledge" of a particular fact or other matter as follows: (i) if the Party is an
                     individual, if such individual is actually aware of sucb fact or other matter or a person
                      serving in the same capacity as such individual would be expected to discover or
                      otherWise become aware, after due inquiry, of such fact or other matter in the course of
                                                                or
                      performing the duties of such individual; (ii) if the Party is a corporation or other form
                      of business entity, if (A) any executive officers of such Party are actually aware of such
                      fact or other matter, or (B) any person or persons serving in the same capacities as such
                      executive officers would be expected to discover or otherwise become aware, after due
                      inquiry, of such fact or other matter in the course of performing the official duties of such
                      offices.

                           (e)      Outstanding Shareholders and Option Holders. Schedule 3.05(e) sets forth
                     a complete list of all shareholders and option holders of the Company as of the Closing
                     Date.

                              '(f)   Original Shareholders Agreement. That certain Shareholders Agreement,
                      dated as of November 1,2000, and entered into by and among the Company and certain
                      of its shareholders, has been temrinated in accordance with its terms on qr before the
                      Closing Date.

                      3.06   Valid Issuance of Purchased Shares and Conversion Shares.

                             (a)     The Purchased Shares, when issued in accordance with this Agreement,
                      will have been validly issued, fully paid and non-assessable and will be free and clear of
                      any lien, charge or other encumbrance and will not be subject to any preemptive or
                      similar rights. The Conversion Shares have been duly and validly reserved for issuance
                      upon conversion thereof and, when issued upon such conversion in accordance with the

,.
                                                               -5-



~"~




      Defendant Giant Eagle's Motion to Dismiss                                                                       PageApp.
                                                                                                                           53 34

                                                                                                                      R082
                   Case 3:11-cv-03331-B Document 26-3 Filed 01/31/12                       Page 7 of 38 PageID 391
,                                              c-'                                          ("



                             Certificate of Designation. will have been validly issued, fully paid and non-assessable
                             and will be free and clear of any lien, charge or other encumbrance and will not be
                             subject to any preemptive or similar rights.

                                     (b)     Based in part on the representations made by the Investor in Article N
                             hereof, the offer and sale of the PilrChased Shares to the Investor in accordance with this
                             Agreement and the issuance of the Conversion Shares are exempt from the registration
                             requirements of the Securities Act of 1933, as amended (the "Securities Act"), and from
                             all other provisions of applicable securities laws of states of the United States.

                              3.07 Governmental Consents. No consent, approval, order or authorization of, or
                      registration. qualification, designation. declaration or filing with, any federal, state or local
                      Governmental Authority is required on the part of the Company in order to enable the Company
                      to execute, deliver and perform its obligations under this Agreement or the Related Agreements
                      and the transactions contemplated hereby and thereby, except for such qualifications or' filings
                      under applicable securities laws as may be required in. connection with the transactions
                      contemplated by this Agreement. All such qualifications and filings will, in the case of
                      qualifications, be effective on the Closing Date and will, in the case of filings, be made within
                      the applicable time period(s) prescribed by law.

                               3.08 Litigation. Except as set forth in Schedule 3.08, no   there are     Proceedings in
                      progress, pending, or, to the Company's Knowledge, threatened against or affecting the
                      Company, the Company's assets, or the transactions contemplated hereby in any court or before
                      any arbitration panel of any kind or before or by any Governmental Authority. For purposes of
                      this Agreement, "Proceeding" sh1li1 mean any action, arbitration, andit, hearing, investigation,
                      litigation, or suit (whether civil, criminal, administrative, judicial, or investigative, whether
                      formal or informal, whether public or private) commenced, brought, conducted, or heard by or
                      before, or otherwise involving any Governmental Authority or arbitrator.

                              3.09   Intellectual Property.

                                      (a)      Except as set forth in Schedule 3.09(a). the Company is the owner of all,
                              or has the perpetual and irrevocable license or right to use, sell and license all of, the
                              Copyrights, Patents, Trade Secrets, Trademarks, Software and other proprietary rights
                              (collectively, ''Intellectual Property") that are used in connection with its business as
                              presently conducted. For the puq>oses of this Agreement, "Copyrigbts" means any
                              foreign or United States copyright registrations and applications for registration thereof,
                              and any non·registered copyrights; "Patents" means any foreign or United States patents
                              and patent applications, including any divisions, continuations, continuations-in-part,
                              substitutions or reissues thereof, whether or not patents are issued on such applications
                              and whether or not such applications are modified, withdrawn or resubmitted; "Trade
                              Secrets" means any trade secrets, research records, processes, procedures, manufacturing
                              formulae, technical know-how, technology, blue prints, designs, plans, inventions
                              (whether patentable and whether reduced to practice), invention disclosures and
                              improvements thereto; "T..ademarks" means any foreign or United Slates trademarks,
                              service marks, trade dress, trade names, brand names, designs and logos, cOIporate



                                                                      -6·



    ..... :


              Defendant Giant Eagle's Motion to Dismiss                                                                     PageApp.
                                                                                                                                 54 35

                                                                                                                            R083
           Case 3:11-cv-03331-B Document 26-3 Filed 01/31/12                        Page 8 of 38 PageID 392
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                     names, product or service identifiers, whether registered or unregistered, and all
                     registrations and applications for registration thereof; and "Software" means any
                     computer software programs, source code, object code, data and documentation_

                             (b)     Except as set forth in Schedule 3_09(b), none of the Intellectual Property
                     owned by the Company is subject to any outstanding judgment, decree, order, writ,
                     injunction, regulation, or rule of any court or Governmental Authority, and no action,
                     suit, proceeding, hearing, investigation, charge, complaint, claim or demand is pending
                     or, to the Company's Knowledge, threatened, which challenges the validity,
                     enforceability, use or ownership of the Company's Intellectual Property.

                             (c)     The Company has performed all material obligations imposed upon it
                     under all Intellectual Property licenses, sublicenses, distributor agreelIlents and other
                     agreements under which it is either a licensor, licensee or distributor, except such
                     licenses, sublicenses and other agreements relating to off-the-shelf software which is
                     commercially available on a retail basis and used solely on the Company's computers
                     (collectively, the "Intellectual Property Licenses"), and is not, nor to the Company's
                     Knowledge is any other party thereto, in breach of or default thereunder in any respect,
                     nor has any event occurred which with notice or lapse of time or both would constitute a
                     default thereunder. All of the Intellectual Property Licenses are valid, enforceable and in
                     full force and effect, and will continue to be so on identical terms immediately following
                     the closing of the transactions contemplated by this Agreement and the Related
                     Agreements, except as may be limited by applicable bankruptcy, insolvency,
                      reorganization, moratorium, and similar laws affecting the enforcement of creditors'
                     rights generally and the application of general principles of equity and judicial discretion.

                              (d)    Except as set forth in Schedule 3.09(d), none of the Intellectual Property
                      currently sold or licensed by the Company to any Person, or to the Company's actual
                      knowledge used by or licensed to the Company by any Person, infringes upon or
                      otherwise violates any Intellectual Property rights of others.

                              (e)     Except as set forth in Schedule 3.09(e), no litigation is pending and no
                      claim has been made against the Company or, to the Company's Kriowledge, is
                      threatened, contesting the right of the Company to sell or license to any Person oruse the
                      Intellectual PrOperty.

                             (f)     Except as set forth in Schedule 3.09(fl, to the Company's Knowledge, no
                      Person is infringing upon or otherwise violating the Intellectual Property rights of the
                      Company.

                              (g)   No former employer of any employee of the Company has made a claim
'.                    against the Company or, to the Company's Knowledge, against any other Person, that
                      such employee is utilizing Intellectual Property of such former employer.

                            (h)    Except as set forth in Schedule 3.09(h), the Company is not a party to or
                      bound by any license or other agreement requiring the payment by the Company of any
1(-



                                                              -7-



G'


      Defendant Giant Eagle's Motion to Dismiss                                                                      PageApp.
                                                                                                                          55 36

                                                                                                                     R084
           Case 3:11-cv-03331-B Document 26-3 Filed 01/31/12                       Page 9 of 38 PageID 393
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                    royalty payment, excluding such agreements relating to off-the-shelf software licensed
                    for use solely on the Company's computers,

                           (i)    Except as set forth on Schedule 3.09(i), to the Company's Knowledge, no
                    employee of the Company is in violation of any requirements of law applicable to such
                    employee, or any term of any employment agreement, patent or invention disclosure
                    agreement or other contract or agreement relating to the relationship of such employee
                    with the Company or any prior employer.

                            G)     To the Company's Knowledge, none of the Company's Trade Secrets,
                    wherever located, the value of which is contingent upon maintenance of confidentiality
                    thereof, has been disclosed to any Person other than employees, representatives and
                    agents of the Company, except as required pursuant to the filing of a patent application
                    by the Company.

                             (k)     Except as set forth on Schedule 3.09(k1, each employee of the Company
                     has executed a confidential information and invention ass.ignment agreement, in the form
                     delivered to the Investor. Except as set forth on Schedule 3.09(]d, no employee of the
                     Company has excluded works or inventions made prior to his or her employment with the
                     Company from his or her assignment of inventions pursuant to such employee's
                     confidential information and invention assignment agreement. Each consultant that has
                     had access to the Company's Intellectual Property has entered into an agreement
                     containing appropriate confidentiality and invention assignment provisions. To the
                     Company's actual lmowledge, no officer, employee or consultant of the Company is in
                     violation of such confidential infonnation and invention assigiunent agreement or any
                     prior employee contract or proprietary infonnation agreement with any other cOIporation
                     or third party.

                      3.10 Registration Rights. The Company is not under any obligation to register any of
              its currently outstanding securities or any securities issuable upon exercise or conversion of its
              currently outstanding securities under the Securities Act, nor is the Company obligated to
              register or qualify any such securities under any state securities or blue sky laws.

                      3.11 Title to Property and Assets. Except as set forth on Schedule 3.11. the Company
              owtiS its properties and assets free and clear of all mortgages, deeds of trust, liens,
              encumbrances, leases and security interests except for statutory liens for the payment of current
              taxes that are not yet delinquent and liens, encumbrances and security interests which arise in the
              ordinary course of business and which do not have a Material Adverse Effect on the Company.
              With respect to the property and assets it leases, the Company is in material compliance with all
              such leases and, to the Company's Knowledge, the Company holds valid leasehold interests in
              such assets free of any liens, encumbrances, security interests or claims of any Person other than
              the lessors of such property and assets.

                     3.12 ERISA Plans. Except for the Company's 401(k) plan, the Company does not
              have any Employee Pension Benefit Plans as defined in Section 3 of the. Employee Retirement
              Income Security Act ofl974, as amended.



                                                              -8-



I_~




      Defendant Giant Eagle's Motion to Dismiss                                                                     PageApp.
                                                                                                                         56 37

                                                                                                                    R085
         Case 3:11-cv-03331-B Document 26-3 Filed 01/31/12                       Page 10 of 38 PageID 394
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                     3.13 Insurance. Schedule 3.13 lists each insurance policy (including fire, theft,
             casualty, general liability, professional liability, workers compensation, business interruption,
             environmental, product liability and automobile insurance policies and bond and surety
             arrangements) to which the Company is a party. There is no material claim pending under any
             such policy as to which coverage has been questioned, denied or disputed by the underwriter of
             such policy. All premiums due and payable under all such policies have been paid, the Company
             may not liable for any retroactive premiums or similar paymeots, and the Company is otherwise
             in compliance in all material respects with the terms of such policies applicable to it. The
             Company has no Knowledge of any threatened termination of, or material premium increase
             (other than increases that are consistent with the increases experienced by the industry in which
             the Company does business) with respect to, any such policy.

                     3.14 Environmental Matters. The Company, to its Knowledge, is not in violation of
             aJ)y applicable statute, law or regulation relating to the environment or occupational health and
             safety, and to the Company's Knowledge, no material expenditures are or will be required in
             orderto comply with any such statute, law or regulation.

                     3.15 Tax Elections. The Company has not elected pursuant to the Internal Revenue
             Code of 1986, as amended (the "Code"), to be treated as an "S" corporation or a collapsible
             corporation pursuant to Section 341(f) or Section 1362(a) ofthe Code, nor has it made any other
             elections pursuant to the Code (other than elections which relate solely to matters of accounting,
             depreciation or amortization) which would have a Material Adverse Effect on the Company, its
             financial Condition, its business as presently conducted or presently proposed to be conducted or
             any of its properties or material assets.

                     3.16    Taxes.

                     (a)     Except as set forth on Schedule 3.16, the Company has (i) timely filed all returns
              required to be filed by it with respect to all federal, state, local, and foreign income, payroll,
              withholding, unemployment, excise, added value, social security, sales and use, real and personal
              property, use and occupancy, business and occupation, mercantile, real estate, capital stock, and
              franchise or other tax (including interest and penalties thereon and including estimated taXes
              thereof) (hereinafter referred to collectively as "Taxes"); (ii) paid all Taxes shown to have
              become due pursuant to such returns; and (iii) paid all other Taxes for which a notice of
              assessment or demand for paymeJ;lt has been recci ved;

                      (h)   All returns for Taxes filed by or on behalf of the Company have been prepared in
              accordance with all applicable laws and requirements and accurately reflect the taXable income
              (or other measure of Tax) of the Company;

                       (c)    There are no Tax liens upon any of the assets o;fthe Company, and the Company
             . is not aware of any audit or other proceeding or investigation, or of any position taken on a Tax
               return of the Company, that could give rise to a Tax lien upon any of the Company's assets; and




                                                             -9-



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     Defendant Giant Eagle's Motion to Dismiss                                                                     PageApp.
                                                                                                                        57 38

                                                                                                                   R086
             Case 3:11-cv-03331-B Document 26-3 Filed 01/31/12                        Page 11 of 38 PageID 395
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                       (d)    The Company has not been advised in writing (i) that any ofits returns have been
                or are being audited as of the date hereof, or (ii) of any deficiency in assessment or proposed
                judgment with respect to its federal, state or local taxes.

                        3.17 Consents. Except as sefforth on Schedule 3,17. no consent, approval, license,
                 permit, authorization, or order of any' Person is required in connection with the execution and
                 delivery of this Agreement and the Related Agreements or the consummation of the transactions
                 contemplated hereby or thereby by the Company.

                         3.18 Financial Statements; No Financial Change. The Company has previously
                 delivered to the Investor true, correct, and complete copies of the following financial statements:
                 unaudited balance sheets, statements of inco_me, statements of changes in shareholders' equity,
                 and statements of cash flows as of and for the years ended December 31, 2003, and an unaudited
                 balance sheet, statement of income, and statement of cash flows as of and for the five months
                 ended May 31, 2004 (the "Company Financial Statements"). The Company Financial
                 Statements have been prepared consistently during the periods indicated, are correct and
                 complete in all respects, accurately present the financial condition and results of operations of
                 the Company as of the dates set forth. Since the date of the Company Financial Statements,
                 there has not been any material adverse change in the' business, operations, prospects, assets,
                 results of operations or condition (financial or other) of the Company, and no event has occurred
                 or circumstance exists that may result in such a change. Except as set forth on Schedule 3.18,
                 the Company Financial Statements were prepared in accordance with generally accepted
                 accounting principles applied on a consistent basis throughout the periods covered thereby.

                        3.19 Changes. Except as set forth on Schedule 3.19, since May 31,2004 (the date of
                 most recent ;financial statements provided to Investor), there has not been:

                               (a)     any change in the assets, liabilities, financial condition or operating results
                 of the Company from that ref1ected in the Company Financial Statements, except changes in the
                 ordinary course of business, that has had a Material Adverse Effect;

                              (b)     any damage, destruction or loss to any assets or properties of the
                 .Company, whether or not covered by insurance, that has had a Material Adverse Effect;

                                 (c)    any waiver by the Company ora valuable right or of a material debt owed
                 to it;

                                  (d)     any change or amendment to an agreement by which the Company or any
                 of its assets or properties is bound or subject that has had a Material Adverse Effect;

                                  (e)     any loans made by the Company 10 or for the benefit of its employees,
                  officers or directors, or any members of their immediate families, other than travel advances and
                  other advances made in the ordinary course of its business;

                                 (1)    any resignation or termination of any executive officer or key employee of
                  the company;



                                                                 -10-


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         Defendant Giant Eagle's Motion to Dismiss                                                                       PageApp.
                                                                                                                              58 39

                                                                                                                         R087
           Case 3:11-cv-03331-B Document 26-3 Filed 01/31/12                        Page      12 of 38 PageID 396
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                            (g)    any material change in any compensation arrangement or agreement with
              any employee, director or shareholder of the Company;

                             (h)     any sale, assignment or transfer of any Patents, Trademarks, Copyrights,
              Trade Secrets or other intangible assets of the Company;                   .

                              (i)    any satisfaction or discharge of any lien, claim, or encwnbrance or
              payment of any obligation by the Company, except in the ordinary course of business and that is
              not material to the business, properties, prospects or financial condition of the Company;

                             (j)     any declaration, setting aside or payment or other distribution in respect of
              any of the Company's capiial ~tock, or any direct or indirect redemption, purchase or other
              acquisition of any of such stock by the Company;

                             (k)  any mortgage, pledge; transfer of a security interest in, or lien, created by
            . the Company; with respect to any of its material properties or aSsets, except liens for taxes not
              yet due or payable;

                             (I)    any receipt of notice that there has been a loss of, or material order
              cancellation by, any major customer of the Company;

                              (m)    to the Company's Knowledge, any other event or condition of any
              character that has had a Material Adverse Effect; or

                             (n). any agreement or coinmitmenl by the Company to do any of the things
              described in this Section 3.19.

                      3.20 Labor Relations; Emplovees. There are no strike, labor dispute or union
              orgauization activities pending or threatened between the Company and its employees. To the
              Company's Knowledge, none of its employees belongs to anyunion or collective ·bargaining unit.
                      as
              E){cept set forth on Schedule 3.20, the Company is not a party to or bound by any currently
              effective employment contract, deferred compensation agreement, bonus plan, incentive plan,
              profit sharing plan, retirement agreement, or other employee compensation agreement. To the
              Cpmpany's Knowledge, no officer or key employee intends to terminate his or her employment
              with the Company, nor does the Company have a present intention to terminate the employment
              of any officer or key employee. Subject to general principles related to wrongful termination of
              employees, the employment of each officer and employee of the Company is terminable at the
              will of the Company.

                      3.21 Material Contracts. Except for the Related Agreements or any agreements listed
               on Schedule· 3.21, there are no agreements, understandings, instroments, contracts, proposed
               transactions, judgments, orders, writs or decrees to which the Company is a party or by which it
               is bound which may involve (i) obligations of, or payments to, the Company in excess of
               $10,000 (other than obligati()ns of, or payments to, the Company arising from agreements
               entered into in the ordinary course of business), (ii) the license of any patent, copyright, trade



                                                              -11-



".,~




       Defendant Giant Eagle's Motion to Dismiss                                                                     PageApp.
                                                                                                                          59 40

                                                                                                                     R088
        Case 3:11-cv-03331-B Document 26-3 Filed 01/31/12                        Page 13 of 38 PageID 397
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"
           secret or other proprietary right to or from the Company or (iii) the grant of rights to produce,
           license, market or sell the Company's products Dr affect the Company's exclusive right to
           develop, manufacture, assemble, distribute, market or sell its products (each, a "Material
           Contract", coJlectively the "Material Contracts"). All Material Contracts to which the
           Company is a party are valid, binding and in full force and effect in all material respects, subject
           to laws of general application relating to bankruptcy, insolvency and the relief of debtors and
           rules oflaw governing specific performance, injunctive relief or other equitable remedies and to
           general principles of equity. Neither the Company nor, to the Company's Knowledge, any other
           party to any Material Contract, is in default under any of such Material Contracts.

                    3.22 Obligations to Related Parties. No employee, officer, director or, to the
           Company's Knowledge, shareholder of the Company or member of his or her inunediate family
           is indebted to the Company,' nor is the Company indebted (or committed to make loans or extend
           or guarantee credit) to any of them other than (i) for payment of salary for services rendered,
           (ii) reimbursement for reasonable expenses incurred on behalf of the Company and (iii) for other
           standard employee benefits made generally available to all employees (including stock option
           agreements outstanding under any stock option plan approved by the Company's Board of
           Directors and stock purchase agreem\lIlts approved by the Company's Board of Directors). To
           the Company's Knowledge, none of such persons has any direct or indirect ownership interest in
           any flm! or corporation with which the COmpany is affiliated or with which the Company has a
           business relationship, or any firm or corporation that competes with the Company, except in
           connection with the ownershIp of stock' in publicly-traded companies. To the Company's
           Knowledge, no employee, officer, director or shl)reholder of the Company, nor any member of
            their immediate families, is, directly or indirectly, interested in any Material Contract with the
            Company (other than such contI:acts as relate to any such person's ownership of capital stock or
            other securities of the Company or such person's employment agreement with the Company).

                   3.23 Full Disclosure. ThCl Company has provided the Investor with all the information
           regarding the Company that the Investor has requested. for deciding whether to purchase the
           Purcbased Shares, as set forth on Schedule 3.23. No representation or warranty regarding the
           Company made in this Agreement, the Related Agreements, the Exhibits and Schedules hereto,
           or the documents to be delivered by the Company at the Closing pursuant to Article II, contains
           any untrue statement of a materiill fact or omits to state a material faci necessary to make the
           statements or facts contained herein not misleading in light of the circumstances under which
           they were made. Each of the Schedules attached hereto is a true and complete list or description,
           as appropriate, of the ittl1DS purported to be listed or described thereon. The Company represents
           and warrants that any financial projections provided to the Investor were prepared in good faith.

                                          ARTlCLEIV
                        REPRESENTATIONS AND WARRANTIES OF THE INVESTOR

                   To induce the Company to enter into this Agreement and to consummate the transactions
            contemplated hereby, the Investor hereby represents and warrants to the Company, as of the
            Closing Date, the following:




                                                           -12-




    Defendant Giant Eagle's Motion to Dismiss                                                                     PageApp.
                                                                                                                       60 41

                                                                                                                  R089
             Case 3:11-cv-03331-B Document 26-3 Filed 01/31/12                         Page 14 of 38 PageID 398
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                         4.01 Organization and Good Standing. The Investor is a corporation duly organized,
                 validly existing, and in good standing under the laws of the State of Delaware.

                         4.02 Authority. The Investor has all requisite corporate power and authority to execute
                 and deliver this Agreement and the Related Agreements and to consmnmate the transactions
                 contemplated hereby and thereby. This Agreement and the Related Agreements have been
                 approved by the Investor's B.oard of Directors and have been du1y authorized, executed, and
                 delivered by the Investor. All corporate action on the part of the Investor's directors and
                 shareholders necessary for the authorization, execution, delivery of, and the perfonnance of all
                 obligations of the Investor under t.lris Agreement and the Related Agreements has been taken or
                 will be taken prior to the Closing. This Agreement and the Related Agreements represent the
                 valid and binding obligations of the Investor, enforceable in accordance with their tenns, except
                 as limited by applicable bankruptcy, insolvency, reorganization, moratorium, and similar laws
                 affecting the enforcement of creditors' rights generally and the application of general principles
                 of equity and judicial discretion. The Investor has delivered to the Company a copy of the
                 resolutions of the Investor's Board of Directors, certified as trUe and correct by the Investor's
                 secretary, approving this Agreement and the Related Agreements and authorizing the execution
                 hereofby the Investor's president         .

                          4.03 No Violation. Neither the execution and delivery by the Investor of this
                  Agreement and the Related Agreements nor the consummation by the Investor of the
                  transactions contemplated l\ereby and thereby will (i) violate any provi~ion of the Delaware
                  General Corporation Law or charter or bylaws of the Investor; (ii) violate, or be iii conflict with,
                  or constitute a default (or an event or condition that, with notice or lapse of time, or both, would
                  constitute a defau1t) under, or result in the termination of, or accelerate the performance required
                  by, or cause th!' acceleration otthe maturity of any agreement to Which the Investor is subject, or
                  result iii the creation or imposition of any security interest, lien, charge, or other encumbrance
                  upon any of the Investor's assets under, any note, bond, mortgage, indenture, deed of trust,
                  license, lease, contract, commitment, understanding, arrangement, agreement, or restriction of
                  any kind or character to which the Investor is a party or by which the Investor may be bound or
                  alfected or to which any the Investor's assets is subject; or (iii) violate any statute or law or any
                  judgment, decree, order, writ, ipjunction, regtJlation, or rule of any court or Governmental
                  Authority.

                          4.04 Brokers. The Investor has not employed any broker, agent, or finder in
                  connection with any transaction contemplated by this Agreement for which the Company may be
                  liable or responsible to pay.

                          4.05 Litigation. There are nO Proceedings in progress, pending, or, to the Investor's
                  Knowledge, threatened against or alfectiug the Investor, the Investor's assets, or the transactions
                  contemplated hereby in any court or before any arbitration panel of any kind or before or by any
                  Governmental Authority, except such proceedings which would not have an effect, individually
                  or in the aggregate, that would be materially adverse to the Investor's assets.

                         4.06 Consents. No consent, approval, license, permit, authorization, or order of any
                  Person is required in connection with the execution and delivery of this Agreement or the



                                                                  -13-



~   ..

         Defendant Giant Eagle's Motion to Dismiss                                                                        PageApp.
                                                                                                                               61 42

                                                                                                                          R090
    Case 3:11-cv-03331-B Document 26-3 Filed 01/31/12                       Page 15 of 38 PageID 399
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       Related Agreements Dr the consummation of the transactions contemplated hereby and thereby
       by the Investor.

               4.07 Full Disclosure. To the Investor's Knowledge, no representation or warranty
       regardinll the Investor made in this Agreement, the Exlu1>its and Schedules hereto, or the
       docwnents to be delivered by the Investor at the Closing pursuant to Article II, contains any
       untrue statement of a material fact that affects the ability of the Investor to conswnmate the
       transactions contemplated by this Agreement and the Related Agreements or omits to state a
       material fact necessary to make the statements or facts contained herein not misleading.

             4.08 Representations Regarding the Acquisition of the Purchased Shares and the
       Conversion Shares.

                       (a)     Purchase Entirely for Own Account. This Agreement is made with the
               Investor in reliance upon the Investor's representation to the Company, which by the
               Investor's execution of this Agreement the Investor hereby confirms, that the Purchased
               Shares to be received by the Investor and the Conversion Shares issuable upon
               conversion thereof (collectively, the "Offered Securities") will be acquired for
               investment for the Investor's own account, not as a nominee or agent, and not with a view
               to the resale or distribution of any part thereof, and that the Investor has no preseJ).t
               intention of selling, granting any participation in or otherwise disoibnting the same. The
               Investor further represents that the Investor does not have any contract, undertaking,
               agreement or arrangement with any person to sell, transfer or grant participations to such
                person or to any third person with respect to the Offered Securities.

                      (b)     Sophistication: Accredited Investor Statlis. The Investor is a Person who
               eithe~ alone or with its· purchaser representative(s) has suffipient knowledge and
               experience in [mancial and business matters to be capable of evaluating the merits and
               risks of an investruent in the Company. The Investor is an· "accredited investor" withil!
               the meaning of Regulation D promulgated under the Securities Act.

                       (c)     Speculative Investment. The Investor understands the speculative nature
               and risks of investments associated with the Company and contlnns that it·is able to bear
               the risk of the iuvestment, and that there may not be any public market for the Offered
               Securities received herein.

                      (d)     No Coercion or Solicitation. The Investor has freely entered this
               Agreement and has been subject to neither pressure to make a hasty or uninformed
               decision to enter into this Agreement nor solicitation to receive the Offered Securities.

                      (e)     Transfer Resoictions. Except as otherwise set forth in this Agreement or
               the Related Agreements, the Investor is not under an obligation to register or seek an
               exemption under any federal andlor state securities acts for any sale or transfer of the
               Offered Securities by the Investor, and the Investor hereby acknowlc:;dges that the Offered
               Securities constitute resoicted securities as that term is defined in Rule 144 under the
               Securities Act and that the Offered Securities may not be sold, transferred, assigned or


                                                      -14-




Defendant Giant Eagle's Motion to Dismiss                                                                    PageApp.
                                                                                                                  62 43

                                                                                                             R091
          Case 3:11-cv-03331-B Document 26-3 Filed 01/31/12                        Page 16 of 38 PageID 400
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 '.                  hypothecated unless there is an effective registration statement under the Securities Act
                     covering the Offered Securities, the sale is made in accordance with Rule 144 under the
                     Securities Act, or the Company receives an opinion of counsel of the Iovestor reasonably
                     satisfactory to the Company, stating that such sale, transfer, assignment or hypothecation
                     is exempt from the registration and prospectus delivery requirements of the Securities
                     Act.

                            (f)     Disclosure of Information. To the Knowledge of the. Iovestor, the Investor
                     has received all the information it considers necessary or appropriate for deciding
                     whether to purchase the Offered Securities. The Investor furtlier represents that it haS had
                     the opportunity to ask questions of the Company and receive answers from the Company,
                     to the extent that the Company possessed such information or could acquire it without
                     unreasonable effort· or expense, necessary to evaluate the merits and risks of any
                     investment in the Company. Further, the Investor has been given an opportunity to
                     queStion the appropriate executive officers of the Company.

                             (g)     Legends. It is understood that the c.ertificates evidencing the Offe!ed
                     Securities will bear the legend set forth below:

                     THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
                     UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE" ACf"), OR
                     UNDER THE SECURITIES LAWS OF ANY OTHER JURISDICTIONS. THESE
                      SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY
                      AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS
                    . PE~TTED UNDER T~ ACT AND THE APPLICABLE STATE SECURITIES
                      LAWS, PURSUANT TO REGISTRATION OR ExEMPTION THEREFROM.
                      INVESTORS SHOULD BE AWARE THAT THEY MA-Y BE REQUIRED TO
                      BEAR TIlE FINANCIAL RISKS OF THIS INV£STMENT FOR AN INDEFINITE
                      PERIOD OF TIME. THE ISSUER OF THESE SECURITIES MAY REQUIRE AN
                      OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO
                      THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR
                      RESALE IS IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE
                      STATE SECURITIES LAWS.

                     The legend set forth above shall be removed by the Company from any certificate
                     evidencing Offered Securities upon delivery to the Company of an opinion by counsel,
                     reasonably satisfactory to the Company, that a registration statement under the Securities
                     Act is at that time in effect with respect to the legended security or that such security can
                     be freely transferred in a public sale without such a registration statement being in effect
                     and that such transfer will not jeopardize the exemption or exemptions from registration
                     pursuant to which the Company issued the Offered Securities.




                                                             -15-



4·'




      Defendant Giant Eagle's Motion to Dismiss                                                                      PageApp.
                                                                                                                          63 44

                                                                                                                     R092
         Case 3:11-cv-03331-B Document 26-3 Filed 01/31/12                       Page 17 of 38 PageID 401
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<,




                                                 ARTICLE V
                                            ADDmONAL AGREEMENTS

                    5.01    Put and Call Ootions.

                            (a)     Within 10 days of the closing of an event that constitutes a Triggering
                    Event (as defmed below) of the Company, the Company shaH notify the lnvestor in
                    writing of such event (a "Company Notice''). In the event of a Triggering Event of the
                    Company, the lnvestor shall have the right to cause the Company to repurchase all, but
                    not less than all, of the Purchased Shares and Conversion Shares, as the case may be, held
                    by the Investor (collectively, the "C;overed Shares'') for a price per share of$36.00 plus
                    increases to such amount equal to 10% annually from the Closing Date through the date
                    of closing the acquisition of the Covered Shares by the Company (the "Put Price"). The
                    lnvestor must notify the Company of its intention to exercise the put right granted
                    pursuant to this Section 5.01(a) in writing (a "Put Exercise Notice") within 60 days oOts
                    receipt of the Company Notice. The Company shaH deliver to the Investor Cash in the
                    dollar amount equal to the number of Cover~d Shares multiplied by the Put Price (the
                    "Put Amount") within 90 days of the Company's receipt of the Put Exercise Notice (the
                    "Put Payment Date"). Notwithstanding anything in this Agreement to the contrary, if a
                    Triggering Event of the Company occurs pursuant to Section 5.01{d){iii) of this
                     Agreement as a resu1l Of the death or permanent disability of Mr. Dickson Perry or
                     pursuant to Section 5.01{d)(iv) of this Agreement, then the Company shall pay the Put
                     Amount to the lnvestor as foHows:

                                   (i) the ~ompany shall deliver to the Investor 50% of the Put Amount in
                     Cash on or before the Put Payment Date; and

                                    (ii) the balance of the Put Amount shaH be delivered to the lnvestor on or
                     before the Put Payment Date in the form of a promissory note (the "Note") payable to the
                     lnvestor. The Note shall expire upon payment in full on the second aruriversary of the Put
                     Payment Date, and shall be for the principal amount equal to 50% of the Put Amount
                     with interest at the aimual rate of 10% payable in 8 quarterly installments of interest to
                     the lnvestor, and with 50% of such principal amount due on the first anniversary of the
                     Put Payment Date and the balance of such principii! amount plus any accrued but unpaid
                     interest due on the second anniversary of the Put Payment Date.

                             (b)    Within 10 days of the closing of an event that constitutes a Triggering
                     Event of the lnvestor or of Giant Eagle, Inc., a Pennsylvania corporation ("Giant Eagle,
                     Inc."), the Investor shall notify the' Company in writing of such event (an "Investor
                     Notice"). In the event of a Triggering Event of the Investor or of Giant Eagle, lnc., the
                     Company shall have the right to repurchase all, but not less than all, of the Covered
                     Shares for an amount equal to the greater of {i} the dollar amount equal to the number of



                                                            -16-



,-

     Defendant Giant Eagle's Motion to Dismiss                                                                    PageApp.
                                                                                                                       64 45

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    Case 3:11-cv-03331-B Document 26-3 Filed 01/31/12                          Page 18 of 38 PageID 402
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               Covered Shares multiplied by the Put Price or (ii) the CalJ Price (as defined below). The
               Company must notify the Investor of its intention to exercise the call right granted
               pursuant to tlris Section 5.01(b) in writing within 60 days of its receipt of the Investor
               Notice. Upon its receipt of such notice from the Company, the Company and the Investor
               shall have 90 days to determine the Call Price, and upon the expiration of such 90-day
               period the Company shall deliver to the Investor Cash in an amount equal to the greater
               of subclause (i) or (ii) oftlris Section 5.01(b).

                       (c)    For the purposes of this Agreement, the "Call Price" shall be determined
               as follows;

                             (i) three appraisals of the Company's value shall be conducted by three
               independent appraisers (selected as described below),

                              (ii) the appraisal which contains a final appraised value between the final
               appraised values provided in the two other appraisals (the "Balle Appraisal") shall be
               added to the final appraised value of the one other appraisal that is closest in amount to .
               the Base Appraisal, and that amount shaH be divided by two to determine the Company's
               value; and

                                (iii) the Company's value as determined in subsection. (ii) above shall be
                divided by (ii) the number of issued and outstanding shares of Common Stock (on an as-
                converted, fully-dUuted basis, but excluding shares of Common Stock issuable pursuant
                to unvested stock options) to deter$ine the Call Price per Covered Share.

                       For purposes of tlris Section 5.01(t). the three independent appraisers shall be
                selected and compensated as follows: (x) one appraiser shall be selected by and at the
                expense of the Company; (y) one appraiser shall be selected by and at the expense of the
                Investor; and (z) one appraiser shall be selected by the two foregoing appraisers whose
                expense shall be borne equally by the Company and the Investor. All appraisals shall be
                completed no later than 90 days after the Company's notification of its inteiltion to
                exercise the call right as provided in subsection (b) above.

                        (d)    For the pUrposes of this Agreement, a "Triggering Event" shall mean (i)
                the cOnsummation of il reorganization, merger or consolidation with an entity, or any
                other event (or series of related events), in which the persons who hold a majority of the
                outstanding capital stock of the Company, the Investor. or Giant Eagle, Inc., as the case
                may be, before such transaction do not OVID at least a majority of the eqUity securities
                entitled to vote to elect directors (or persons serving in a similar capacity) of the entity
                surviving such transaction, (ii) a disposition of all or substantially all of the assets of the
                Company, the Investor, or Giant Eagle, Inc., as· the case may be, (iii) in the case of the
                Company, if Mr. Dickson Perry ceases to serve as a member of the Company's executive
                management, or (iv) in the case of the Company, if the Company, due to the outcome of
                any litigation set forth in Schedule 3.08, loses the right to use its Reward Marketing
                Engine software module and has no replacement for such software module within 180
                days of the event of such loss.



                                                         -17-




Defendant Giant Eagle's Motion to Dismiss                                                                         PageApp.
                                                                                                                       65 46

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                       5.02 Repurchase Restrictions. For so long as the Investor holds at least 7,5% of the
               Company's issued and outstanding Common Stock (on an as-converted, fully-diluted basis), the
               consent of the Investor shall be required for the repurchase or redemption by the Company of
               any shares of Common Stock ot Preferred Stock from any of the Company's shareholders in
               either a single or multiple transactions and from time to time for an aggregate amount if. excess
               of$250,000 (except pursuant to any obli~tion or right of the Company to repurchase or redeem
               shares of Common Stock or Preferred Stock upon termination of a Company shareholder's
               employment or other service to the Company or pursuant to Section 5.01 (a) or (b) of this
               Agreement),

                       5.03 Information Rights, For so long as the Investor continues to bold at least 5% of
               the Company's issued and outstanding Common Stock (on an as-converted, fully-diluted basis),
               the Company shall deliver to' Investor annual, quarterly and monthly financial statements, annual
               budgets and other information reasonably requested by the Investor. The annual financial
               statements shall be audited by an accounting :ti.nD. approved by the COmpany's board of directors.
               The Investor shall have the right ho more than twice per calendar year, with reasonable notice
               and at the Investor's sole expense, to inspect, or have its accountants inspect, the Company's
               books and records; provided, however, that such inspection(s) shall be conducted in a manner so
               as not to be unreasonably disruptive to the Company's operations.

                      5.04 Use of Purchase Price. The Purchase Price shall be used by the Company for
               items such as working capital. capital expenditures, product development, marketing and sales
               expenses and il)S\1l"lIIIce coverages (including key person Hfe insurance coverages) or as
               otherwise approved by the Company's board of directors.

                        5.05 Stock Option Agreements. Each stock option agreement executed after the
                Closing Date between the Company and any optionee (each, an "Optionee") in connection with
                a Common Stock option grant shall provide, unless otherwise approved by the Investor, that (i)
                upon the cessation of employment or service to the Company for any reason, such Optionee shall
                iinmediately lose all unvested options; (ii) if such Optionee is terminated for cause, such
                Optionee shall immediately lose all vested but unexercised options and the Company shall have
                the right to repurchase any shares of Common Stock purchased by such Optionee pursuant to the
                exercise of options at the actual exercise price of such options; and (iii) jf such Optionee's
                employment with or service to the Company ceases for any reason other than termination for
                cause (including WIthout limitation by reason of death or disability), the Optionee (or his or her
                estate as the case may be) shall have 60 days to exercise any vested options, and the Company
                shall have the right to repurchase any shares of Common Stock purchased by such Optionee (or
              . his or her estate as the case may be) pursuant to the exercise of options at the then-current fair
                market value of such share of Common Stock, as reasonably determined by the Company's
                board of directors. The Company shall also use its best efforts to enter into amended stock option
                agreements containing the provisions set forth in the preceding sentence with all Persons with
                whom the Company has entered into stock option agreements prior to the Closing Date.

                        5.06 Retail/Gasoline Station Alliances. The Investor shall have the non-exclusive right
                to license the Company's Products and to establish retail/gas station alliances utilizing the


                                                              -18-



~.~.




       Defendant Giant Eagle's Motion to Dismiss                                                                     PageApp.
                                                                                                                          66 47

                                                                                                                     R095
        Case 3:11-cv-03331-B Document 26-3 Filed 01/31/12                        Page 20 of 38 PageID 404
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"         Company's Products in any market in which the Investor operates as of or after the Closing Date.
          Any exclusive license or arrangement granted to any other Person in any such market shall
          provide an exception for the Investor's non"exclusive rights as set forth in the preceding
          sentence. For the purposes of this Agreement, "Products" means the technology which the
          Company has licensed to the Investor as of the Closing Date, and all improvements and
          enhancements thenito, and the Company's Reward Marketing Engine software module.

                  5.07 Board Representation. For so long as the Investor holds at least 7.5% of the
          Company's issued and outstanding Common Stock (on an as"converted, fully"diluted basis), the
          Investor shall have the right to nominate one candidate (the "Iuvestor Designee") for election to
          the Company's Board of Directors. The initial Investor Designee shall be Mr. David Shapira. In
          the event of Mr. Shapira's death or disability, or if the Company requests the resignation of Mr.
          Shapira (in which event the Investor shall cause Mr. Shapira to promptly resign from the
          Company's Board of Directors), the Company shall make a written request (the "Board
          R~quesf') to the Investor for the appointment of another designee for director by the Investor,
          and tlie Investor shall provide at least two candidates for director as follows: (i) one executive-
          level employee of the Investor who has significant experience in operations and
          merchandising/marketing in the grocery retail business and is not directly involved in the
           management of the working relaiionship between the Investor and the Company, and (ii) one
           independent candidate who is not involved in the Investor's business but has significant
           experience in managing investments such as the Investor's interest in Company. The remaining
           members of the Company's Board of Directors shall, within 30 days of the Investor's submission
           to the Company of candidates meeting such qualifications, approve one of the Investor's
           candidates as set forth above and appoint such candidate as a director of the Company. In the
           event that the Investor. does not submit candidates to the company within 90 days of the
           Investor's receipt of a Board Request, then the Investor shall be deemed to have fully waived its
           right to designate a candidate for appointment to the Company's Board of Directors, the
           remaining members of the Company's Board shall fill the investor's position on the Company's
           Board of Directors, and the Investor shall no longer have any right to nominate a candidate for
           election to the Company's Board of Directors. Any Board Request shall clearly state the
           Investor's rights and obligations pursuant to this Section 5.07, including the deemed waiver of
           rights hereunder if the Investor fails to submit candidates within 90 days of the Investor's receipt
           of a Board Request.

                                            ARTICLE VI
                         CONDITIONS TO THE PARTIES' OBLIGATIONS AT CLOSING

                  6.01 Conditions to Obligations of the Company. The obligation of the Company to
           hold the Closing is subject to the satisfaction of the following conditions on or before the Closing
           Date unless waived in writing by the Company:

                   (a)    Renresentations and Warranties. The representations and warranties of the
                   Investor contained in Article IV shall be true and complete as of the Closing Date,

                   (b)     Deliverables. The Company shall have received the deliverables from the Investor
                   in accordance with the provisions of Section 2.01(b).


                                                           -19-




    Defendant Giant Eagle's Motion to Dismiss                                                                     PageApp.
                                                                                                                       67 48

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         Case 3:11-cv-03331-B Document 26-3 Filed 01/31/12                       Page 21 of 38 PageID 405
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                    (c)     Certificate of Designation Effective. The Certificate of Designation shall have
                    been duly adopted by the Company by all requisite board and shareholder action, and
                    shall have been duly filed with and accepted by the Secretary of State of the State of
                    Texas.

                    (d)    Securities Exemptions. The offer and sale of the Purchased Shares to the Investor
                    pursuant to this Agreement shall be exempt from the registration and prospectus delivery
                    requirements of the Securities Act, the registration and qualification requirements of all
                    applicable securities laws of states of the United States and all other provisions of
                    applicable securities laws of states of the United States.        .

                    6.02 Conditions to Obligations of the Investor. The obligation of the Investor to hold
             the Closing is subject to the satisfaction of the following conditions unless waived in writing by
             the Investor:

                    (a)   Renresentations and Warranties. The representations and warranties of the
                    Comp'any contained in Article ill shall be true and complete as of the Closing Date.

                    (b)     Certificate of Designation Effective. The Certificate of Designation shall have
                    been duly adopted by the Company by all requisite shareholder and board action, and
                    shall have been duly filed with and accepted by the Secretary of State of the State of
                    Texas.                                              .

                     (c)    Ntlfleompetition Agreements. Each officer and other key employee of' the
                     Company shall have entered into a noncompetition agreement with the Company in a
                     form reasonably acceptable. to the Investor.

                     (d)    Deliverables. The Investor shall have received the deliverables from the Company
                     in accordance with the provisions of Section 2.01(a).

                                                     ARTICLE VII
                                                  INDEMNIFICATION

                     7.01.. Indemnification by the Company. The Company shall defend, indemnify and hold
             harmless the Investor and its directors, officers, employees and agents (each an "Investor
             Indemnitee") from and against any and all claims (including without limitation any
             investigation, action or proc.eeding, whether instituted by a third party against the Company or an
             Investor Indemnitee or by an Investor Indemnitee for the purpose of enforcing its rights
             hereunder), damages, losses, liabilities, costs and expenses (including without limitation
             reasonable attorneys' fees and court costs) that constitote, or arise out of or in connection with:

                        (a) any misrepresentation or breach of warranty under Article III hereof (a
              "Company Warranty Breach"); or




                                                            -20-



c.


     Defendant Giant Eagle's Motion to Dismiss                                                                     PageApp.
                                                                                                                        68 49

                                                                                                                   R097
          Case 3:11-cv-03331-B Document 26-3 Filed 01/31/12                        Page 22 of 38 PageID 406
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                           (b) any default by the Company in the perfonnance or observance of any of its
             covenants or agreements hereunder or under the Related Agreements or any instruments or
             agreements contemplated herein or therein.

                     7.02. Inderrinification by the Investor. The Investor shall defend, inderrinifY and hold
             harmless the Company and its directors, officers, employees and agents (each a "Company
             Indemnitee") from and against any and all claims (including without limitation any
             investigation, action or proceeding, Whether instituted by a third party against a Company
             Indemnitee or by a Company Indemnitee for the purpose of enforcing its rights hereunder),
             damages, losses, liabilities, costs and expenses (including without limitation reasonable
             attorneys' fees and court costs) that constitute, or arise out of or in connection with:

                         (a) any misrepresentation or breach of warranty under Article IV (an "Investor
             Warranty Breacb"); or

                           (b) any default by the Investor in the perfonnance or observance of any of its
             covenants or agreements hereunder or under the Related Agreements or any instruments or
             agreements contemplated herein or therein.

                       7.03. Rejlresentation, Settlement and Cooperation. If any investigation, action or other
              proceeding (each a "Proceeding") is initiated against any Investor Indemnitee or Company
              Indemnitee (each an "Indemnitee") and such Inderrinitee intends to seek inderrinification from
              the Company or the Investor (each an "Indemnitor"), as applicable, under this Artiele on.
              account of its involvement in such Proceeding, then such Inderrinitee shaH give prompt written
              notic.e to the applicable Indemnitor of such Proceedillg. The failure to deliver prompt written
              notice to the Inderrinitor after the commencement of any such action, if materially prejudicial to
              its ability to defend such action, shall relieve such Indemnitor of any liability to the Indemnitee
              under this Article VII to the extent of the prejUdice caused by such failure. Upon receipt of such
              notice, such Indemnitor shail diligently defend against such Proceeding on behalf of sllch
              Indemnitee at its own expense using counsel reasonably acceptable to such Indemnitee;
              provided, that if such Indemnitor Shall fail or refuse to conduct such defense, or such Indemnitee
              has been advised by counsel that it may have defenses available to it which are different from or
              in addition to those available to such Indemnitor, or that its interests in such Proceeding are
              adverse to such Inderrinitor's interests, then such Inderrinitee may defend against such Proceeding
              at such Indemnitor's expense. Such .Indemnitor or Indemnitee, as applicable, may participate in
               any Proceeding being defended against by the other at its own expense, and shall not settle any
               Proceeding without the prior consent of the other, which consent shall not be unreasonably
               withheld. Such Indemnitor and Indeninitee shall cooperate with each other in the conduct of any
              such Proceeding.

                      7.04, Notice and Satisfaction of Indemnification Claims. No indemnification claim shall
              be deemed to have been asserted until the applicable Indemnitor has been given notice by the
              Inderrinitee of the amount of such claim and the facts on which such claim is based. For
              purposes of Section 7.04, notice of an indemnification claim shall be deemed to cover claims
              arising out of all related Proceedings so long as, in the case of Proceedings instituted by third
              parties, the Inderrinitee complies with Section 7,03. Indemnification claims shall be paid within



                                                             -21-




      Defendant Giant Eagle's Motion to Dismiss                                                                     PageApp.
                                                                                                                         69 50

                                                                                                                    R098
        Case 3:11-cv-03331-B Document 26-3 Filed 01/31/12                         Page 23 of 38 PageID 407
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          30 days after the Indemnitor's receipt of such notice and such evidence of the amount of such
          claim and the Indemnitor's liability therefor as the lndemnitor may reasonably request.


                                                  ARTICLEVm
                                                 MISCELLANEOUS

                    8.01 Refonnation and Severability. If any provision of this Agreement is held to be
           illegal, invalid or unenforceable under present or future laws effective during the term hereof: (a)
           in lieu of such illegal, invalid, or unenforceable provision, there shall be added automatically as a
           part of this Agreement a provision as similar io terms to such illegal, invalid, or unenforceable
           provision as may be possible and be legal, valid, and enforceable; and (b) the legality, validity,
           and enforceability of the remaining provisions hereof shall not in any way be affected or
           impaired thereby.

                  8.02 Further Assurances. Each Party shall, from time to time after the Closing Date, at
           the request of any other Party and without further consideration, execute and deliver such other
           instruments of conveyance, assignments, transfer, and assumption, and take such other actions,
           as such other Party may reasonably request to more effectively consummate the transactions
           contemplated by this Agreement and the Related Agreements.

                   8.03 Notices. Any notice or other communication required or permitted to be given
           hereunder shall be in writing and shall be !fent by first class U.S. mail (certified mail - return
           receipt requested), or by facsimile transmission (if facsimile transmission is also sent by regular
           U.S. mail the s!ime day), or delivered by hand or by overnight or similar delivery service, fees
           prepaid, to the Party to whOm it (s to be given at the address of such party set forth below or to
           such other address for notice as such Party shall provide io accordance with the ierms of this
           Section 8.03. Except as otherwise specifically provided in this Agreement, notice so given shall,
           in the case of notice given l:y certified mail (or by such comparable method) be deemed to be
           given and received three busioess days after the time of certification thereof (or comparable act),
           in the case of notice so given by ovemight delivery service, on the date of actual delivery, and, in
           the case of notice so given by facsimile transmission or personal delivery, on the date of actual
           transmission or, as the case may be, personal delivery.

                   If to the Company:             CClSTech, Inc.
                                                  Attn: Mr. DickSon Perry, President & CEO
                                                  4320 North Beltlioe Road, Suite A205
                                                  Irviog, TX 75038
                                                  Fax: (972) 258-0646
                                                  Email: dperry@Ccistech.com

                   With copies to:                CCISTech, Inc.
                                                  Attn: Mr. Jim Mills, Vice President & Secretary
                                                  4320 North Beltline Road, Suite A205
                                                  Irving, TX 75038
                                                  Fax: (972) 258-0646


                                                            -22-




    Defendant Giant Eagle's Motion to Dismiss                                                                      PageApp.
                                                                                                                        70 51

                                                                                                                   R099
         Case 3:11-cv-03331-B Document 26-3 Filed 01/31/12                       Page 24 of 38 PageID 408
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                                                 Email: jmills@ccistech.com

                                                 Fish & Richardson P.C.
                                                 5000 Bank One Center
                                                 1717 Main Street
                                                 Dallas, Texas 75201
                                                 Attn: Steven R. Block
                                                 Fax: (214) 747-2091
                                                 Email: block@fr.com

                    If to the Investor:          Giant Eagle of Delaware, Inc.
                                                 c/o Giant Eagle, Inc.
                                                 Attn: John Lucot, Vice President
                                                 101 Kappa Drive
                                                 Pittsburgh, PA 15238
                                                 Fax: 412.963.3522
                                                 Email: john.lucot1@gianteagle.com

                    With copies to:               Giant Eagle, Inc.lLegal Department
                                                  Ann: Richard A. Russell, Vice President, General Counsel
                                                  261 KappaDrive
                                                  Pittsburgh, PA 15238
                                                  Fax: 412.963.3522
                                                  Email: rick.russell@gianteagle.com

                                                  Cohen & Grigsby, P .C.
                                                  11 Stanwix Street, IS1li Floor
                                                  Pittsburgh, PA 15221
                                                  Fax: 412.209.0672
                                                  Attention:    David J. Kalson, Esq.
                                                                James R. Carlisle, II, Esq.

                     8.04 Headings. 1."he headings of sections contained in this Agreement are for
             convenience only and shall not be deemed to control or affect the meaning or construction of any
             p'rovision of this Agreement.

                     8.05 Waiver. The failure of any party to insist, in anyone or more instances, upon
             performance of any of the terms, covenants, or conditions of this Agreement shall not be
             construed as a waiver or a relinquisbment of any right or claim granted or arising hereunder or of
             the future performance of any such term, covenant, or condition, and such failure shall il:i no way
             affect the validity of this Agreement or the rights and obligations of the Parties. No waiver of
             any provision or condition of this Agreement shall be valid unless executed in writing and signed
             by the Party to be bound thereby, and then only to the extent specified in such waiver. No
             waiver of any provision or condition of this Agreement shall be construed as a waiver of any
             other provision or condition of this Agreement, and no present waiver of any proviSion or
             condition of this Agreement shall be construed as a future waiver of such provision or condition.



                                                            -23-



'"
     Defendant Giant Eagle's Motion to Dismiss                                                                     PageApp.
                                                                                                                        71 52

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        Case 3:11-cv-03331-B Document 26-3 Filed 01/31/12                       Page 25 of 38 PageID 409
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                8.06 GOVERNING LAW; VENUE. THIS AGREEMENT SHALL BE
           GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
           STATE OF TEXAS WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS
           RULES OR CHOICE OF LAWS RULES THEREOF OR OF ANY STATE. VENUE FOR
           ANY' ACTION ARISING OUT OF THIS AGREEMENT SHALL RESIDE
           EXCLUSIVELY IN THE COUNTY IN WHICH THE RESPONDENT'S PRINCIPAL
           OFFICES ARE LOCATED.

                   8.07 Court Costs and Attorneys' Fees. If any action at law or in equity, including.an
           action for declaratory relief, is brought to enforce or interpret the provisions of this Agreement,
           the prevailing party shall be entitled to recover costs of court and reasonable attorneys' fees from
           the other party or parties to such action, which fees may be set by the court in the trial of such
           action or may be enforced in a separate action brought for that purpose, and which fees shall be
           in addition to any other relief that may be awarded.

                    S.08 Assignability and Binding Effect. This Agreement shall inure to the benefit of
            and. be binding up.on the Parties and their respective successors, heirs, and pemritted assigns.
            This Agreement and the rights and obligations hereunder shall not be assignable without the
            express written consent of all Parties.

                   8.09 Expenses. Taxes, Etc. The Company shall pay all fees, taxes, and expenses
            incurred by it in connection with this Agreement, and the Investor shall pay all fees, taxes, and
            expenses incurred by it in connection with the transactions contemplated by this Agreement.

                   8,10 Third Parties. Nothing herein expressed or implied is intended or shall be
            construed to confer upon or give to any Person other than the Parties and their successors, heirs
            or permitted assigns, any rights or remedies und.er or by reason of this Agreement.

                    8.11 Number and Gender of Words. When the context SO requires in this Agreement,
            words of gender shall include either or both genders and the singular number shall include the
            plura\.

                     8.12 Entire Agreement, This Agreement together with the Schedules and Exhibits
             attached hereto, shall constitute the entire agreement between the Parties with respect to the
             transactions contemplated hereby and shall supersede all prior or contemporaneous negotiations,
             understandings and agreements with respect thereto, There are no representations, agreements,
             arrangements, or understandings, oral or written, between or among the Parties relating to the
            .subject matter of this Agreement that are not fully expressed herein.

                    8,13 Survival of Representations and Warranties. All representations, warranties,
            covenants, and obligations of the Parties shall survive the Closing for a period of 18 months
            thereafter.




                                                           -24-




    Defendant Giant Eagle's Motion to Dismiss                                                                     PageApp.
                                                                                                                       72 53

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                     8.14 Multiple Counterparts.          This Agreement may be executed in mUltiple
             counterparts, including by facsimile signature, each of which shal1 be deemed to be an original
             but all of which together shall constitute one and the same instnunent.

                    8.15 Amendment. This Agreement may not be modified, amended, or supplemented
             except by an agreement in writing signed by all of the Parties.

                                  [The remainder of this page is intentionally left blank.]




                                                             -25-



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     Defendant Giant Eagle's Motion to Dismiss                                                                 PageApp.
                                                                                                                    73 54

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       Case 3:11-cv-03331-B Document 26-3 Filed 01/31/12                  Page 27 of 38 PageID 411
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                                                                           ('
FROM                                "             FAX NO.   :9722580646     Au9. 06 201i!4   as: 13PM   P2




                 IN WITNESS WHEREOF. the Parties hnve caused this Agreement to be eXe<luted os of
          the date first above written.

                                            THE COMPANY:

                                            CCISTECH, INC.




                                            THll; "iNVESTOR:

                                            "GIA,NT EAGLE OF DELAWARE, INC.


                                            By:
                                            Naine: John Lucot
                                            Title: Vice President




                                                              -26-




  Defendant Giant Eagle's Motion to Dismiss                                                                  PageApp.
                                                                                                                  74 55

                                                                                                             R103
          Case 3:11-cv-03331-B Document 26-3 Filed 01/31/12                  Page 28 of 38 PageID 412
                                        r-                                    ('
                                       \                                      '-




                      IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed as of
              the date first above written,

                                             THE COMPANY:

                                             CCISTECH, INC.


                                             By:
                                             Name: Dickson Perry
                                             Title: President & CEO

                                             THE INVESTOR:

.::                                                              F DELAWARE, INC.
.~:

                                             By:
                                             Name: Jbl\bll.1Ib
                                                                    ~
                                             Title:
                                                                              ~


','




                                                             -26-




      Defendant Giant Eagle's Motion to Dismiss                                                         PageApp.
                                                                                                             75 56

                                                                                                        R104
         Case 3:11-cv-03331-B Document 26-3 Filed 01/31/12                  Page 29 of 38 PageID 413
                                      r                                       I~-'
                                                                              .[
                                                                                   -.

                                                  EXHmITLIST

            Exhibit A-Form of Certificate of Designation
            Exhibit B-Form of Company's Secretary Certificate
            Exhibit C-Form of Company's Officer's Certificate
            Exhibit D--Fonn of Registration Rights Agreement
            Exhibit E-Form of Shareholders Agreement
            Exhibit F-Form of Opinion Letter
            Exhibit G-Form ofInvestor's Secretary Certificate
            Exhibit H-Form of Investor's Officer's Certificate

                                                 SCHEDULE LIST


            Schedule 3.0 I (a)-Organizational Documents of the Company
            Schedule 3,0y--No Violation
            Schedule 3.0S(c}-Rights of First Refusal
            Schedule 3,05(d}-Past Issuances
            Schedule 3,05(e}-Shareholders and Optionholders of the Company
            Schedule 3.08-Litigation
            Schedule 3,09(a}-Intellectual Property Liens
            Schedule 3.09(b}-Intellectual Property Judgments
            Schedule 3,09(d)-Intellectual Property Infringement of Third Party Rights
            Schedule 3,09(e}-Intellectual Property Litigation
            Schedule 3,09(I}-Intellectual Property Infringement of Company Parties' Rights
            Schedule 3,09(h}-Intellectual Property Royalties
            Schedule 3,09(i}-Employee Violations
            Schedule 3.09(k}-Excluded Works and Inventions
            Schedule 3, II-Title to Property and Assets
            Schedule 3,13-Insurance
            Schedule 3.16-Taxes
            Schedi/le 3,17-Consents
            Schedule 3.18-GAAP
            Schedule 3,19-Changes
            Schedule 3.20-Employee Agreements and Plans
            Schedule 3.21-Material Contracts
            Schedule 3.2Y--Due Diligence Materials




                                                        ·27·



.'
     Defendant Giant Eagle's Motion to Dismiss                                                         PageApp.
                                                                                                            76 57

                                                                                                   R105
    Case 3:11-cv-03331-B Document 26-3 Filed 01/31/12                           Page 30 of 38 PageID 414
                                                                                (,-.
                               ('                                               ,


                                                   Schedule 3.08

                                                     Litigation

        On March 4, 2004, Metrosplash Systems Group, Inc. ("Metrosplash") filed a petition in the
        192nd District Court of Dallas County, Texas against the Company, Buehler Foods, Inc., and
        Jason R. Stancil. The causes of action asserted by Metrosplash were breach of fiduciary duty,
        civil conspiracy, unjust enrichment, and unfair competition. In the alternative, Metrosplash
        requested the court to grant injunctive relief to prevent the unfarr business practice of
        misappropriation of intellectual property owned by Metrosplash. Metrosplash, the entity that is a
        successor in interest to certain of the assets of Fuel links, Inc., relies on the Febl1lary 2003
        License Agreement between the Company and Fuel Links to bring its claims.

        On April 22, 2004, the Company and Jason R. Stancil filed counterclaims against Metrosplash
        and a third-party petition against Christopher J. Daly, Comstock Data Mining, Inc., Tad Marko,
        Jeffrey Beardsley, Marvin Brinkley ~/a Brinkley POS, and Shadow Media, Inc. The
        counterclaims included tortioWl interference with existing and prospective business relations,
        civil conspiracy, defamation, tortious interference with contract, business disparagement and
        unfair competition.                          '

        folloWVlg negotiations between the parti¢s to the litig1!tion;' a\enipo~ ;ei;tniirifng ord~r waS
        put in place that prevented each party from disparagingth!' 'bili~r parties      t6
                                                                                          other perSoll,s 'or
        entities involved in the retail fuel technology services mark6f..'tl).e Company expectS thai" a
        temjJOfaIy injunction hearing will occur in the future. MetrosplljSh'has indicat~d tillit it wilfagree
        to a temPorary ~junction that is commensUrate with the terriisdf thy temporary, restraining order:
        T!\e Company
          .' -.',   . continues
                         .       to defend itself against
                                                  .       MetrosPlash's·c\lallns.
                                                                         ::'
                                                                                  ,""
                                                                               :-::.                . . . .":


                                                                           !"        "




                                                                                "


                                                                             "'


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         "                                                                "i:',·




                                                         -8-




Defendant Giant Eagle's Motion to Dismiss                                                                        PageApp.
                                                                                                                      77 58

                                                                                                                 R106
    Case 3:11-cv-03331-B Document 26-3 Filed 01/31/12   Page 31 of 38 PageID 415
                                                        .)




          ..   :




Defendant Giant Eagle's Motion to Dismiss                                          PageApp.
                                                                                        78 59

                                                                               R107
            Case 3:11-cv-03331-B Document 26-3 Filed 01/31/12           Page 32 of 38 PageID 416
                                         )                                   .j
                                                                             \




                                                           .:, .   :,   '.




                                                    -Ol-

~   .


        Defendant Giant Eagle's Motion to Dismiss                                                  PageApp.
                                                                                                        79 60

                                                                                               R108
         Case 3:11-cv-03331-B Document 26-3 Filed 01/31/12                 Page 33 of 38 PageID 417
                                     .r                                     ('--
                                    (



                                                   Schedule 3.09(d)

                                Intellectnal Property Infringement of Third party Rights

             See Schedule 3.08.




                                                          -11-

,-

     Defendant Giant Eagle's Motion to Dismiss                                                        PageApp.
                                                                                                           80 61

                                                                                                  R109
    Case 3:11-cv-03331-B Document 26-3 Filed 01/31/12   Page 34 of 38 PageID 418
                                                        )




                                            -<;r-




Defendant Giant Eagle's Motion to Dismiss                                          PageApp.
                                                                                        81 62

                                                                               R110
         Case 3:11-cv-03331-B Document 26-3 Filed 01/31/12                Page 35 of 38 PageID 419
                                     c·
                                     t:                                    c-

                                                   Schedule 3.09(1)

                             Intellectual Property Infringement of Company Parties' Rights

             None.




                                                         -13-

..
     Defendant Giant Eagle's Motion to Dismiss                                                       PageApp.
                                                                                                          82 63

                                                                                                 R111
    Case 3:11-cv-03331-B Document 26-3 Filed 01/31/12   Page 36 of 38 PageID 420
                                                         .....J
                                )                       '\




                                            -11I-




Defendant Giant Eagle's Motion to Dismiss                                          PageApp.
                                                                                        83 64

                                                                               R112
    Case 3:11-cv-03331-B Document 26-3 Filed 01/31/12   Page 37 of 38 PageID 421
                                 )




        'auoN




Defendant Giant Eagle's Motion to Dismiss                                          PageApp.
                                                                                        84 65

                                                                               R113
          Case 3:11-cv-03331-B Document 26-3 Filed 01/31/12                          Page 38 of 38 PageID 422




                                                  pUll S"lIJOM papnpxa   SlIOplI:lAlIJ


              ':;)UON




                                                               -91-

.",

      Defendant Giant Eagle's Motion to Dismiss                                                                 PageApp.
                                                                                                                     85 66

                                                                                                            R114
                                        EXHIBIT 4

              2005 Series B Preferred Stock Purchase Agreement




Defendant Giant Eagle's Motion to Dismiss                          Page 86



                                                                 R115
     Case 3:11-cv-03331-B Document 26-4 Filed 01/31/12   Page 2 of 39 PageID 424




Defendant Giant Eagle's Motion to Dismiss                                          PageApp.
                                                                                        87 67

                                                                                   R116
     Case 3:11-cv-03331-B Document 26-4 Filed 01/31/12   Page 3 of 39 PageID 425




Defendant Giant Eagle's Motion to Dismiss                                          PageApp.
                                                                                        88 68

                                                                                   R117
     Case 3:11-cv-03331-B Document 26-4 Filed 01/31/12   Page 4 of 39 PageID 426




Defendant Giant Eagle's Motion to Dismiss                                          PageApp.
                                                                                        89 69

                                                                                   R118
     Case 3:11-cv-03331-B Document 26-4 Filed 01/31/12   Page 5 of 39 PageID 427




Defendant Giant Eagle's Motion to Dismiss                                          PageApp.
                                                                                        90 70

                                                                                   R119
     Case 3:11-cv-03331-B Document 26-4 Filed 01/31/12   Page 6 of 39 PageID 428




Defendant Giant Eagle's Motion to Dismiss                                          PageApp.
                                                                                        91 71

                                                                                   R120
     Case 3:11-cv-03331-B Document 26-4 Filed 01/31/12   Page 7 of 39 PageID 429




Defendant Giant Eagle's Motion to Dismiss                                          PageApp.
                                                                                        92 72

                                                                                   R121
     Case 3:11-cv-03331-B Document 26-4 Filed 01/31/12   Page 8 of 39 PageID 430




Defendant Giant Eagle's Motion to Dismiss                                          PageApp.
                                                                                        93 73

                                                                                   R122
     Case 3:11-cv-03331-B Document 26-4 Filed 01/31/12   Page 9 of 39 PageID 431




Defendant Giant Eagle's Motion to Dismiss                                          PageApp.
                                                                                        94 74

                                                                                   R123
    Case 3:11-cv-03331-B Document 26-4 Filed 01/31/12   Page 10 of 39 PageID 432




Defendant Giant Eagle's Motion to Dismiss                                          PageApp.
                                                                                        95 75

                                                                               R124
    Case 3:11-cv-03331-B Document 26-4 Filed 01/31/12   Page 11 of 39 PageID 433




Defendant Giant Eagle's Motion to Dismiss                                          PageApp.
                                                                                        96 76

                                                                               R125
    Case 3:11-cv-03331-B Document 26-4 Filed 01/31/12   Page 12 of 39 PageID 434




Defendant Giant Eagle's Motion to Dismiss                                          PageApp.
                                                                                        97 77

                                                                               R126
    Case 3:11-cv-03331-B Document 26-4 Filed 01/31/12   Page 13 of 39 PageID 435




Defendant Giant Eagle's Motion to Dismiss                                          PageApp.
                                                                                        98 78

                                                                               R127
    Case 3:11-cv-03331-B Document 26-4 Filed 01/31/12   Page 14 of 39 PageID 436




Defendant Giant Eagle's Motion to Dismiss                                          PageApp.
                                                                                        99 79

                                                                               R128
    Case 3:11-cv-03331-B Document 26-4 Filed 01/31/12   Page 15 of 39 PageID 437




Defendant Giant Eagle's Motion to Dismiss                                          Page 100
                                                                                        App. 80
                                                                               R129
    Case 3:11-cv-03331-B Document 26-4 Filed 01/31/12   Page 16 of 39 PageID 438




Defendant Giant Eagle's Motion to Dismiss                                          Page 101
                                                                                        App. 81
                                                                               R130
    Case 3:11-cv-03331-B Document 26-4 Filed 01/31/12   Page 17 of 39 PageID 439




Defendant Giant Eagle's Motion to Dismiss                                          Page 102
                                                                                        App. 82
                                                                               R131
    Case 3:11-cv-03331-B Document 26-4 Filed 01/31/12   Page 18 of 39 PageID 440




Defendant Giant Eagle's Motion to Dismiss                                          Page 103
                                                                                        App. 83
                                                                               R132
    Case 3:11-cv-03331-B Document 26-4 Filed 01/31/12   Page 19 of 39 PageID 441




Defendant Giant Eagle's Motion to Dismiss                                          Page 104
                                                                                        App. 84
                                                                               R133
    Case 3:11-cv-03331-B Document 26-4 Filed 01/31/12   Page 20 of 39 PageID 442




Defendant Giant Eagle's Motion to Dismiss                                          Page 105
                                                                                        App. 85
                                                                               R134
    Case 3:11-cv-03331-B Document 26-4 Filed 01/31/12   Page 21 of 39 PageID 443




Defendant Giant Eagle's Motion to Dismiss                                          Page 106
                                                                                        App. 86
                                                                               R135
    Case 3:11-cv-03331-B Document 26-4 Filed 01/31/12   Page 22 of 39 PageID 444




Defendant Giant Eagle's Motion to Dismiss                                          Page 107
                                                                                        App. 87
                                                                               R136
    Case 3:11-cv-03331-B Document 26-4 Filed 01/31/12   Page 23 of 39 PageID 445




Defendant Giant Eagle's Motion to Dismiss                                          Page 108
                                                                                        App. 88
                                                                               R137
    Case 3:11-cv-03331-B Document 26-4 Filed 01/31/12   Page 24 of 39 PageID 446




Defendant Giant Eagle's Motion to Dismiss                                          Page 109
                                                                                        App. 89
                                                                               R138
    Case 3:11-cv-03331-B Document 26-4 Filed 01/31/12   Page 25 of 39 PageID 447




Defendant Giant Eagle's Motion to Dismiss                                          Page 110
                                                                                        App. 90
                                                                               R139
    Case 3:11-cv-03331-B Document 26-4 Filed 01/31/12   Page 26 of 39 PageID 448




Defendant Giant Eagle's Motion to Dismiss                                          Page 111
                                                                                        App. 91
                                                                               R140
    Case 3:11-cv-03331-B Document 26-4 Filed 01/31/12   Page 27 of 39 PageID 449




Defendant Giant Eagle's Motion to Dismiss                                          Page 112
                                                                                        App. 92
                                                                               R141
    Case 3:11-cv-03331-B Document 26-4 Filed 01/31/12   Page 28 of 39 PageID 450




Defendant Giant Eagle's Motion to Dismiss                                          Page 113
                                                                                        App. 93
                                                                               R142
    Case 3:11-cv-03331-B Document 26-4 Filed 01/31/12   Page 29 of 39 PageID 451




Defendant Giant Eagle's Motion to Dismiss                                          Page 114
                                                                                        App. 94
                                                                               R143
    Case 3:11-cv-03331-B Document 26-4 Filed 01/31/12   Page 30 of 39 PageID 452




Defendant Giant Eagle's Motion to Dismiss                                          Page 115
                                                                                        App. 95
                                                                               R144
    Case 3:11-cv-03331-B Document 26-4 Filed 01/31/12   Page 31 of 39 PageID 453




Defendant Giant Eagle's Motion to Dismiss                                          Page 116
                                                                                        App. 96
                                                                               R145
    Case 3:11-cv-03331-B Document 26-4 Filed 01/31/12   Page 32 of 39 PageID 454




Defendant Giant Eagle's Motion to Dismiss                                          Page 117
                                                                                        App. 97
                                                                               R146
    Case 3:11-cv-03331-B Document 26-4 Filed 01/31/12   Page 33 of 39 PageID 455




Defendant Giant Eagle's Motion to Dismiss                                          Page 118
                                                                                        App. 98
                                                                               R147
    Case 3:11-cv-03331-B Document 26-4 Filed 01/31/12   Page 34 of 39 PageID 456




Defendant Giant Eagle's Motion to Dismiss                                          Page 119
                                                                                        App. 99
                                                                               R148
    Case 3:11-cv-03331-B Document 26-4 Filed 01/31/12   Page 35 of 39 PageID 457




Defendant Giant Eagle's Motion to Dismiss                                          PageApp.
                                                                                        120 100

                                                                               R149
    Case 3:11-cv-03331-B Document 26-4 Filed 01/31/12   Page 36 of 39 PageID 458




Defendant Giant Eagle's Motion to Dismiss                                          PageApp.
                                                                                        121 101

                                                                               R150
    Case 3:11-cv-03331-B Document 26-4 Filed 01/31/12   Page 37 of 39 PageID 459




Defendant Giant Eagle's Motion to Dismiss                                          PageApp.
                                                                                        122 102

                                                                               R151
    Case 3:11-cv-03331-B Document 26-4 Filed 01/31/12   Page 38 of 39 PageID 460




Defendant Giant Eagle's Motion to Dismiss                                          PageApp.
                                                                                        123 103

                                                                               R152
    Case 3:11-cv-03331-B Document 26-4 Filed 01/31/12   Page 39 of 39 PageID 461




Defendant Giant Eagle's Motion to Dismiss                                          PageApp.
                                                                                        124 104

                                                                               R153
                                        EXHIBIT 5

                      Addendum No. 1 to Software License and
                           General Services Agreement




Defendant Giant Eagle's Motion to Dismiss                       Page 125



                                                               R154
     Case 3:11-cv-03331-B Document 26-6 Filed 01/31/12   Page 2 of 7 PageID 488




Defendant Giant Eagle's Motion to Dismiss                                         PageApp.
                                                                                       126 129

                                                                                  R155
     Case 3:11-cv-03331-B Document 26-6 Filed 01/31/12   Page 3 of 7 PageID 489




Defendant Giant Eagle's Motion to Dismiss                                         PageApp.
                                                                                       127 130

                                                                                  R156
     Case 3:11-cv-03331-B Document 26-6 Filed 01/31/12   Page 4 of 7 PageID 490




Defendant Giant Eagle's Motion to Dismiss                                         PageApp.
                                                                                       128 131

                                                                                  R157
     Case 3:11-cv-03331-B Document 26-6 Filed 01/31/12   Page 5 of 7 PageID 491




Defendant Giant Eagle's Motion to Dismiss                                         PageApp.
                                                                                       129 132

                                                                                  R158
     Case 3:11-cv-03331-B Document 26-6 Filed 01/31/12   Page 6 of 7 PageID 492




Defendant Giant Eagle's Motion to Dismiss                                         PageApp.
                                                                                       130 133

                                                                                  R159
     Case 3:11-cv-03331-B Document 26-6 Filed 01/31/12   Page 7 of 7 PageID 493




Defendant Giant Eagle's Motion to Dismiss                                         PageApp.
                                                                                       131 134

                                                                                  R160
                                        EXHIBIT 6

              Second Amended Complaint from First Texas Case




Defendant Giant Eagle's Motion to Dismiss                       Page 132



                                                               R161
        Case 3:11-cv-03331-B Document 22 Filed 01/18/12              Page 1 of 17 PageID 243



                            IN THE UNITED STATES DISTRICT COURT
                            FOR THE NORTHERN DISTRICT OF TEXAS
                                      DALLAS DIVISION

   EXCENTUS CORPORATION,                           §
                                                   §
                    Plaintiff,                     §
                                                   §
   v.                                              §     CIVIL ACTION NO. 3:11-CV-03331
                                                   §
   GIANT EAGLE, INC., DAVID SHAPIRA,               §
   AND DANIEL SHAPIRA,                             §
                                                   §
                    Defendants.                    §

                                   SECOND AMENDED COMPLAINT

            Plaintiff Excentus Corporation (“Excentus”), for its Second Amended Complaint against

   Defendants Giant Eagle, Inc. (“Giant Eagle”), David Shapira, and Daniel Shapira (collectively,

   “Defendants”), alleges as follows:

                                               PARTIES

            1.      Excentus is a Corporation duly organized and existing under the laws of the State

   of Texas, having a principal of business at 14241 Dallas Parkway, Suite 1200, Dallas, Texas

   75254.

            2.      Giant Eagle is a corporation duly organized and existing under the laws of the

   State of Pennsylvania, having a principal place of business at 101 Kappa Drive, RIDC Park,

   Pittsburgh, Pennsylvania 15238. Giant Eagle has appeared and may be served through counsel.

            3.      David Shapira is a citizen of Pennsylvania and a Director of Excentus Corporation

   as well as an Officer of Giant Eagle. David Shapira has appeared and may be served through

   counsel.




   95411180.3                                      -1-

Defendant Giant Eagle's Motion to Dismiss                                                           Page 133
                                                                                                    R162
      Case 3:11-cv-03331-B Document 22 Filed 01/18/12                  Page 2 of 17 PageID 244



            4.      Daniel Shapira is a citizen of Pennsylvania and a Director of Excentus

   Corporation as well as an Owner and/or Director of Giant Eagle. Daniel Shapira has appeared

   and may be served through counsel.

                                                JURISDICTION

            5.      This Court has subject matter jurisdiction pursuant to 28 U.S.C. § 1332 because

   this action is between citizens of different states and the matter in controversy exceeds

   $75,000.00. This Court also has subject matter jurisdiction over the patent infringement claims

   pursuant to 28 U.S.C. §§ 1331 and 1338(a) because Excentus’ patent infringement claims arise

   under the patent laws of the United States, including 35 U.S.C. § 271 et seq. This Court also has

   supplemental jurisdiction over the non-patent infringement claims pursuant to 28 U.S.C. § 1367

   because the non-patent infringement claims are so related to the patent infringement claims (i.e.

   intertwined) that they form the same case or controversy under Article III of the United States

   Constitution. The claim for declaratory judgment relief is brought under 28 U.S.C. §§ 2201-

   2202 and Federal Rule of Civil Procedure 57.

            6.      The Court has personal jurisdiction over Giant Eagle because this action arises by

   virtue of Giant Eagle’s position as a shareholder of Excentus and because Giant Eagle committed

   a tort in whole or in part in the State of Texas (as described in more detail below). As a result of

   its status as a shareholder, Giant Eagle holds two seats on Excentus’ Board of Directors. Giant

   Eagle has appointed David Shapira and Daniel Shapira (collectively, “the Shapiras”) as Directors

   of Excentus Corporation to hold those seats. The breaches of the duties of loyalty and utmost

   good faith described below were committed by the Shapiras in whole or in part in the State of

   Texas, and Giant Eagle aided, abetted, and knowingly participated in such breaches, in whole or

   in part, in the State of Texas.          Those actions constitute a tort and have directly damaged

   Excentus, a Texas corporation with its principal place of business located in Dallas County,


   95411180.3                                         -2-

Defendant Giant Eagle's Motion to Dismiss                                                             Page 134
                                                                                                        R163
      Case 3:11-cv-03331-B Document 22 Filed 01/18/12                  Page 3 of 17 PageID 245



   Texas. The claims also result from an agreement (described below) between Giant Eagle and

   Excentus, a Texas resident. That agreement establishes that Giant Eagle does business in the

   State of Texas pursuant to Texas Civil Practice and Remedies Code § 17.042(1) by contracting

   with a Texas resident (i.e., Excentus). The exercise of personal jurisdiction over the Defendants

   in the State of Texas in this case is authorized by Chapter 17 of the Texas Civil Practice and

   Remedies Code and does not offend traditional notions of fair play and substantial justice.

   Because personal jurisdiction exists over Giant Eagle in the State of Texas, the claims for patent

   infringement are properly in this federal court.

                                                 VENUE

            7.      Venue is proper in this District pursuant to 28 U.S.C. §§ 1391 (b) and (c) because

   (1) this action arises from torts committed by the Defendants that have damaged Excentus in

   Dallas County, Texas, (2) Giant Eagle is a stockholder in and has entered into a contractual

   relationship with Excentus, a resident of Texas and this District, (3) a substantial part of the

   events or omissions giving rise to this claim occurred in this District, (4) a substantial part of

   property that is the subject of this action is situated in this District, and (5) the Defendants are

   subject to personal jurisdiction in this District at the time this case is commenced.

                                                 FACTS

            8.      Excentus (formerly CCISTech, Inc.) was founded by Dickson Perry in 1996 in

   Dallas, Texas.     Between 1998 and 2001, Excentus became a leader in providing fuel site

   automation and integration to grocery point of sale systems.

            9.      In 2001, Giant Eagle and Excentus began discussions regarding Excentus

   providing Giant Eagle with technology in support of Giant Eagle’s efforts to design and test a

   gas/grocery cross-marketing program using fuel discounts as consumer loyalty rewards.




   95411180.3                                         -3-

Defendant Giant Eagle's Motion to Dismiss                                                             Page 135
                                                                                                      R164
      Case 3:11-cv-03331-B Document 22 Filed 01/18/12                  Page 4 of 17 PageID 246



            10.     In February 2002, Excentus and Giant Eagle entered into a Software License and

   General Services Agreement and an Addendum was executed in February 2010 (“Agreement”).

   By the Agreement, Excentus provided specific software that Giant Eagle uses in its “fuelperks!”

   program, which is Giant Eagle’s gas/grocery cross-marketing program using fuel discounts as

   consumer loyalty rewards.

            11.     Giant Eagle’s “fuelperks!” program has been successful and significantly

   benefitted Giant Eagle’s business through increased sales and profits.

            12.     In addition to providing proprietary technology to Giant Eagle under the

   Agreement, Excentus shared confidential information with Giant Eagle regarding Excentus’ plan

   to form a national cross-marketing program to leverage the Excentus programs to include many

   other types of retailers that would benefit all the retailers involved (as well as Excentus) by using

   fuel discounts as consumer loyalty rewards to increase sales.

            13.     Giant Eagle was so impressed with the Excentus technology and future plans that

   it invested in Excentus twice (in 2004 and 2005) and became one of the largest Excentus

   shareholders.

            14.     As part of these transactions, Giant Eagle demanded that it have seats on the

   Excentus Board, and the Shapiras soon joined the Excentus Board as directors.

            15.     As part of the investment in Excentus, Giant Eagle committed to support

   Excentus’ current and future business and plans. Also, a commitment was made by Giant Eagle

   to license the fuelperks! brand to Excentus for potential use in its business.

            16.     In 2005, Giant Eagle began to promote the sales and use of gift cards of other

   retailers in Giant Eagle grocery stores utilizing its “fuelperks!” program. The gift cards were

   provided by Blackhawk Network (a subsidiary of Safeway) (“Blackhawk”).




   95411180.3                                      -4-

Defendant Giant Eagle's Motion to Dismiss                                                              Page 136
                                                                                                       R165
      Case 3:11-cv-03331-B Document 22 Filed 01/18/12                 Page 5 of 17 PageID 247



            17.     As a result of the promotional activities, Giant Eagle’s gift card sales grew

   exponentially. During this time, Excentus made multiple requests for Giant Eagle to share

   information regarding its “fuelperks!” program, which was information that Giant Eagle had

   agreed to provide to Excentus upon becoming an Excentus investor and shareholder.

            18.     In late 2006, David Shapira facilitated discussions between Blackhawk and

   Excentus that resulted in an offer from Blackhawk to acquire Excentus.                David Shapira

   supported and encouraged Excentus management to complete this transaction.

            19.     During the due diligence phase of the transaction, Excentus educated Blackhawk

   on its business and competitors, including providing information to Blackhawk about Auto-Gas

   Systems, Inc. (“Auto-Gas”) and its portfolio of patents relating to fuel discounts.

            20.     In 2007, Blackhawk began negotiations with Auto-Gas to acquire its fuel

   discounts patent portfolio. Upon learning of this and other information, Excentus terminated its

   discussions with Blackhawk, to the disappointment of David Shapira and Giant Eagle. During

   this process, Giant Eagle was also educated on the Auto-Gas patent portfolio.

            21.     In June 2008, after applying significant pressure on Giant Eagle to fulfill its

   obligations, Excentus finally entered into a license agreement with Giant Eagle for Excentus to

   use the “fuelperks!” brand, as the parties had agreed to when Giant Eagle gained an ownership

   interest in Excentus. No claim is brought or made with respect to this license agreement.

   Excentus is in compliance with such agreement.

            22.     Immediately following the execution of the licensing agreement for Excentus to

   use the “fuelperks!” brand, Excentus began offering the fuelperks! brand to other grocers. In

   addition, Excentus continued its business of executing other agreements that did not include the

   use of the “fuelperks!” brand.




   95411180.3                                      -5-

Defendant Giant Eagle's Motion to Dismiss                                                            Page 137
                                                                                                     R166
      Case 3:11-cv-03331-B Document 22 Filed 01/18/12                Page 6 of 17 PageID 248



            23.     Excentus also made formal requests for Giant Eagle to follow through on its

   commitments, which Excentus justifiably relied on as material inducements to allow Giant Eagle

   to gain an ownership interest in Excentus, including but not limited to: (1) sharing important

   information about Giant Eagle’s “fuelperks!” program with Excentus, (2) entering into an

   agreement by which Giant Eagle’s “fuelperks!” program would become part of the Excentus

   Coalition, and (3) addressing numerous partnership issues, such as the participation of Giant

   Eagle personnel in Excentus’ share group meetings that included other Excentus grocer

   customers, the sharing of information related to Giant Eagle’s gift card sales and its relationship

   with Blackhawk, and the participation in and the sharing of information related to Giant Eagle’s

   test of a payment card associated with its “fuelperks!” program introduced in conjunction with

   another Excentus shareholder.

            24.     In September 2008, Excentus acquired Auto-Gas’s fuel discounts patent portfolio

   (“Excentus Patents”).       Randy Nicholson, the father of Pay-at-the-Pump technology, is the

   primary inventor of many of these inventions and has sat on Excentus’ Board of Directors since

   the acquisition, a move that the Shapiras approved and supported.

            25.     By 2008, Giant Eagle’s sales of other retailers’ gift cards promoted by its

   “fuelperks!” program had attained an estimated $500 million to $1 billion in sales. Around this

   time, Giant Eagle (as Blackhawk’s largest customer) renegotiated its agreement with Blackhawk.

   Upon information and belief, the final agreement granted Giant Eagle an ownership interest in

   Blackhawk, or at least granted Giant Eagle the right to acquire such an interest.

            26.     At all relevant times, Excentus encouraged Giant Eagle to act in good faith to

   resolve numerous outstanding issues, including but not limited to: (1) the failure of Giant Eagle

   to fulfill its commitments and obligations that Excentus had justifiably relied upon in allowing




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   Giant Eagle to gain an ownership interest in Excentus, and (2) Giant Eagle’s refusal to: (a) enter

   into the appropriate agreements to support Excentus’ plans for a nationwide coalition which

   allows fuel discounts to be earned from many different types of retailers and subsequently

   redeemed (“the Excentus Coalition”), or (b) obtain a license to the Excentus Patents for use in

   the Giant Eagle fuelperks! program and pay Excentus for such license.

            27.     Due to concerns that the Excentus Coalition would adversely impact Giant

   Eagle’s gift card sales, Giant Eagle attempted to convince Excentus to abandon the Excentus

   Coalition strategy. While continuing to use the Excentus Patents without a license, Giant Eagle

   also threatened to form its own coalition through use of its gift card sales to compete with the

   Excentus Coalition.

            28.     As Excentus directors, the Shapiras owed Excentus strict duties of loyalty and

   utmost good faith. The Shapiras also are officers and/or directors of Giant Eagle, and their

   actions described herein were taken on behalf of Giant Eagle and were adverse to Excentus; thus,

   the actions of the Shapiras described herein constitute the acts of Giant Eagle. Reference to

   Giant Eagle is reference to these acts.

            29.     Beginning in 2005 and continuing to the present, Giant Eagle has embarked on a

   course of action to disrupt and gain control of Excentus through breaches of the Shapiras’ duties

   of loyalty and utmost good faith. As directors of Excentus, such duties of loyalty and good faith

   are owed first to Excentus and not to Giant Eagle. Regardless, in many dealings related to

   Excentus, the Shapiras have placed Giant Eagle’s interests ahead of Excentus’ interests. This

   includes, but is not limited to, seeking third-party redemption partners for its “fuelperks!”

   program contrary to its commitments (and with inside knowledge of Excentus’ plans) to only do

   so through the Excentus relationship, dealings as described below concerning the Excentus




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   Patents, threatening to use gift cards to compete with the Excentus Coalition, and other business

   dealings in favor of Giant Eagle and adverse to Excentus. In short, whenever there was a choice

   to do what was best for Excentus and what was best for Giant Eagle, the Shapiras have

   consistently chosen to place Giant Eagle’s interests ahead of Excentus’ interests. For example,

   even after Excentus acquired the Excentus Patents in 2008, an understanding has existed between

   Excentus and Giant Eagle that the parties would negotiate the appropriate agreements concerning

   rights to use the Excentus Patents. The Shapiras, as members of Excentus’ Board of Directors in

   2008, voted in favor of the transaction that transferred the fuel discounts patent portfolio to

   Excentus and allowed Mr. Nicholson to gain his seat on Excentus’ Board of Directors. As

   discussed below, Giant Eagle clearly understood that it had no rights to the Excentus Patents, and

   signed a document stating as much in February 2010 (i.e., the Agreement). Recently, however,

   despite repeated demands to do so, Giant Eagle and the Shapiras have refused to act in good faith

   to negotiate a license or other agreement to provide Giant Eagle with the right to use the

   Excentus Patents and to compensate Excentus fairly for such use. Because Giant Eagle is using

   the Excentus Patents without a license or other authorization to do so, Giant Eagle is an infringer

   of the Excentus Patents.

            30.     In a telephone conversation that took place in November 2011, Giant Eagle

   President and CEO David Shapira (and Excentus Director) told Excentus President and CEO

   Dickson Perry that the Agreement granted Giant Eagle a license to the Excentus Patents, despite

   the plain language of the Agreement to the contrary. Such a denial was a breach of the duties of

   loyalty and utmost good faith owed to Excentus by David Shapira. At the Shapiras’ (and others

   at Giant Eagle) direction, knowledge, and consent, Giant Eagle is using the Excentus Patents

   daily in its business. A position that Giant Eagle has a license to the Excentus Patents, when the




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   written Agreement is directly contradictory, is neither loyal nor in utmost good faith. Rather, the

   position is taken in an attempt to avoid the significant liability associated with infringement of

   the Excentus Patents by Giant Eagle. This intentional misconduct is in the best interest of Giant

   Eagle – not Excentus.

                   BREACH OF DUTIES OF LOYALTY AND UTMOST GOOD FAITH

             31.     Excentus incorporates and adopts by reference paragraphs 1-31 as if fully set forth

   herein.

             32.     As directors of Excentus, the Shapiras owe duties of loyalty and utmost good faith

   to Excentus. The Shapiras have willfully and intentionally breached their duties of loyalty and

   utmost good faith in their dealings with Excentus, and such conduct was opposed to the best

   interests of Excentus. Excentus brings this claim only for the Shapiras breaches of their duties of

   loyalty and utmost good faith in their dealings with Excentus; this claim does not include

   breaches of any other duties owed to Excentus by the Shapiras. On information and belief, the

   reason the Shapiras have breached their duties of loyalty and utmost good faith is because the

   Shapiras have desired to control and own Excentus as well as attempted to treat it as their own.

   With respect to dealings with Blackhawk, gift cards, and the use of fuel as a commodity, Giant

   Eagle and the Shapiras have used the Excentus information to gain an advantage in the

   distribution, promotion, and sale of gift cards inside of Giant Eagle stores, all without

   remuneration to Excentus.

             33.     With respect to the treatment of the patent rights held by Excentus, Giant Eagle

   expressly acknowledged in February 2010 that it held no rights to any patents or other

   intellectual property of Excentus. This was consistent with the understanding between Giant

   Eagle/the Shapiras and Excentus that the parties would resolve any patent issues with Excentus

   at another time.      Instead of acknowledging such understanding to resolve the issues, the


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   Shapiras, aided and abetted by Giant Eagle, have claimed that Giant Eagle already holds rights to

   the patents in direct contradiction to the terms of the February 2010 Agreement and have caused

   Giant Eagle to infringe the Excentus Patents as described below.

            34.     Also in direct contradiction of the duties of loyalty and utmost good faith owed to

   Excentus, Giant Eagle/the Shapiras have objected to the Fuel Rewards Network (“FRN”)

   recently launched by Excentus solely because it will adversely impact Giant Eagle. The FRN is

   the culmination of Excentus efforts and plans for the Excentus Coalition. It was developed by

   Excentus over time based on feedback from the market, including current and prospective

   Excentus customers (e.g., Giant Eagle), relating to its plans for the Excentus Coalition. It took

   years of hard work to find a suitable partner for the FRN as well as to implement it. Finally, the

   FRN is live and in the marketplace. Instead of cheering the rollout of the FRN which is to the

   great benefit of Excentus, the Shapiras have complained of it and looked for excuses to object to

   it because they have placed their own interests and those of Giant Eagle ahead of Excentus.

            35.     Giant Eagle/the Shapiras have also attempted to elicit information from Excentus

   Board of Director meetings which would benefit Giant Eagle.

            36.     The above-referenced conduct, and other similar conduct, constitutes a willful and

   intentional breach of the Shapiras duties of utmost good faith and loyalty to Excentus, causing

   injury to Excentus in Texas and benefiting Giant Eagle/the Shapiras. At least part of the

   Shapiras conduct in breach of such duties occurred in Texas. Discovery will further reveal that

   the actions of Giant Eagle/the Shapiras with respect to Excentus were taken to enhance Giant

   Eagle, not Excentus. Excentus was injured, and Giant Eagle/the Shapiras have gained as a result

   of these breaches. Giant Eagle has knowingly participated in the Shapiras’ breaches of their

   duties of loyalty and utmost good faith in their dealings with Excentus as described above, and




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   has aided and abetted the Shapiras’ breaches of such duties of loyalty and utmost good faith as

   described above. Excentus sues for its actual damages and for a constructive trust to be placed

   on the proceeds, profits, funds, and other consideration obtained as a result of the above-

   described breaches of duty. This tort was committed at least in part in the State of Texas.

             37.    As a result of the Shapiras above-described breaches of duty of loyalty and utmost

   good faith and Giant Eagle’s knowing participation, aiding, and abetting of such breaches, all

   profits earned by the Defendants as a result of the above-described breaches of duty should be

   disgorged.

                                 DECLARATORY JUDGMENT CLAIM

             38.    Excentus incorporates and adopts by reference paragraphs 1-38 as if fully set forth

   herein.

             39.    This is a complaint for declaratory relief pursuant to 28 U.S.C. §§ 2201-2202 and

   Federal Rule of Civil Procedure 57 in which Excentus asks the Court to clarify the rights and

   legal relationship between Excentus and Giant Eagle to settle the case and controversy at issue

   before it ripens into a violation of law or breach of duty.

             40.    Excentus and Giant Eagle are parties to the Agreement, which Giant Eagle now

   claims provides Giant Eagle with, among other things, a license to the Excentus Patents.

             41.    It is Excentus’ position that the Agreement does not provide Giant Eagle with a

   license to the Excentus Patents, and in fact, the express terms of the Agreement confirm that

   Giant Eagle is granted no license to the Excentus Patents under the Agreement.

             42.    Whether Giant Eagle has a license to the Excentus Patents under the Agreement is

   a substantial controversy between Excentus and Giant Eagle of sufficient immediacy and reality

   to warrant the issuance of a declaratory judgment. The presence or absence of a license to the

   Excentus Patents in the Agreement is an issue ripe for adjudication and capable of immediate


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   judicial determination by reference to well-established contract interpretation principles and the

   four corners of the Agreement.

             43.    Excentus requests that the Court consider all evidence and declare that the

   Agreement does not provide Giant Eagle with a license to the Excentus Patents.                  Such a

   declaration would provide Excentus with the requested and specific relief from uncertainty and

   insecurity with respect to the legal relation between Giant Eagle and Excentus arising from the

   Agreement. Therefore, Excentus is asking this Court for real and specific relief through a decree

   of conclusive character based on actual facts that will allow the Court to adjudicate this case and

   controversy.

                          INFRINGEMENT OF U.S. PATENT NO. 6,321,984

             44.    Excentus incorporates and adopts by reference paragraphs 1-44 as if fully set forth

   herein.

             45.    On November 27, 2001, United States Patent No. 6,321,984 (“the ‘984 Patent”)

   was duly and legally issued for an invention entitled “Adjustable price fuel dispensing system.”

   A copy of the ‘984 Patent is attached as Exhibit A.

             46.    The ‘984 Patent was assigned to Excentus, and Excentus holds all rights and

   interests in the ‘984 Patent.

             47.    Giant Eagle has engaged and is engaging in unauthorized conduct and activities

   that violate 35 U.S.C. § 271 et seq., constituting direct infringement, contributory infringement,

   and/or induced infringement, literally and/or under the doctrine of equivalents, of one or more

   claims of the ‘984 Patent, including but not limited to the Giant Eagle “fuelperks!” program

   directly and/or indirectly infringing at least claims 1, 5, 8, 14, and 15 of the ‘984 Patent.

             48.    The acts of infringement by Giant Eagle have caused damages to Excentus, and

   Excentus is entitled to recover from Giant Eagle the damages sustained by Excentus as a result of


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   their wrongful acts in an amount subject to proof at trial.        Giant Eagle’s infringement of

   Excentus’ exclusive rights under the ‘984 Patent will continue to damage Excentus’ business,

   causing irreparable harm (including loss of market share), for which there is no adequate remedy

   at law, unless it is enjoined by this Court. Giant Eagle continues to wrongfully profit from

   activities that infringe the ‘984 Patent.

             49.    Furthermore, the infringements of the ‘984 Patent by Giant Eagle are willful and

   deliberate, entitling Excentus to increased damages under 35 U.S.C. § 284 and to attorneys’ fees

   and costs incurred in prosecuting this action under 35 U.S.C. § 285.

                          INFRINGEMENT OF U.S. PATENT NO. 6,332,128

             50.    Excentus incorporates and adopts by reference paragraphs 1-50 as if fully set forth

   herein.

             51.    On December 18, 2001, United States Patent No. 6,332,128 (“the ‘128 Patent”)

   was duly and legally issued for an invention entitled “System and method of providing multiple

   level discounts on cross-marketed products and discounting a price-per-unit-volume of

   gasoline.” A copy of the ‘128 Patent is attached as Exhibit B.

             52.    The ‘128 Patent was assigned to Excentus, and Excentus holds all rights and

   interests in the ‘128 Patent.

             53.    Giant Eagle has engaged and is engaging in unauthorized conduct and activities

   that violate 35 U.S.C. § 271 et seq., constituting direct infringement, contributory infringement,

   and/or induced infringement, literally and/or under the doctrine of equivalents, of one or more

   claims of the ‘128 Patent, including but not limited to the Giant Eagle “fuelperks!” program

   directly and/or indirectly infringing at least claims 1-4 and 20-23 of the ‘128 Patent.




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             54.    The acts of infringement by Giant Eagle have caused damages to Excentus, and

   Excentus is entitled to recover from Giant Eagle the damages sustained by Excentus as a result of

   their wrongful acts in an amount subject to proof at trial.         Giant Eagle’s infringement of

   Excentus’ exclusive rights under the ‘128 Patent will continue to damage Excentus’ business,

   causing irreparable harm (including loss of market share), for which there is no adequate remedy

   at law, unless it is enjoined by this Court. Giant Eagle continues to wrongfully profit from

   activities that infringe the ‘128 Patent.

             55.    Furthermore, the infringements of the ‘128 Patent by Giant Eagle are willful and

   deliberate, entitling Excentus to increased damages under 35 U.S.C. § 284 and to attorneys’ fees

   and costs incurred in prosecuting this action under 35 U.S.C. § 285.

                          INFRINGEMENT OF U.S. PATENT NO. 7,383,204

             56.    Excentus incorporates and adopts by reference paragraphs 1-56 as if fully set forth

   herein.

             57.    On June 3, 2008, United States Patent No. 7,383,204 (“the ‘204 Patent”) was duly

   and legally issued for an invention entitled “System and method to provide customer incentive to

   provide non-fuel products and services.” A copy of the ‘204 Patent is attached as Exhibit C.

             58.    The ‘204 Patent was assigned to Excentus, and Excentus holds all rights and

   interests in the ‘204 Patent.

             59.    Giant Eagle has engaged and is engaging in unauthorized conduct and activities

   that violate 35 U.S.C. § 271 et seq., constituting direct infringement, contributory infringement,

   and/or induced infringement, literally and/or under the doctrine of equivalents, of one or more

   claims of the ‘204 Patent, including but not limited to the Giant Eagle “fuelperks!” program

   directly and/or indirectly infringing at least claims 1-3, 5-9, 12, and 13 of the ‘204 Patent.




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             60.    The acts of infringement by Giant Eagle have caused damages to Excentus, and

   Excentus is entitled to recover from Giant Eagle the damages sustained by Excentus as a result of

   their wrongful acts in an amount subject to proof at trial.        Giant Eagle’s infringement of

   Excentus’ exclusive rights under the ‘204 Patent will continue to damage Excentus’ business,

   causing irreparable harm (including loss of market share), for which there is no adequate remedy

   at law, unless it is enjoined by this Court. Giant Eagle continues to wrongfully profit from

   activities that infringe the ‘204 Patent.

             61.    Furthermore, the infringements of the ‘204 Patent by Giant Eagle are willful and

   deliberate, entitling Excentus to increased damages under 35 U.S.C. § 284 and to attorneys’ fees

   and costs incurred in prosecuting this action under 35 U.S.C. § 285.

                                            UNFAIR COMPETITION

             62.    Excentus incorporates and adopts by reference paragraphs 1-62 as if fully set forth

   herein.

             63.    Giant Eagle’s actions described herein constitute business conduct that is contrary

   to honest practice in commercial matters.

             64.    Giant Eagle gained an unfair advantage in the market by capitalizing on Excentus’

   efforts and success in its fuel discount systems by infringing its patents and gaining access to

   Excentus’ confidential and proprietary information and technology and then using these for

   Giant Eagle’s benefit and against Excentus in the marketplace, which are acts that constitute

   unfair competition under the common law.

             65.    Giant Eagle’s acts were willful and in bad faith. Giant Eagle has continued to

   infringe Excentus’ patents and use Excentus’ confidential and proprietary information and

   technology against Excentus, and will continue to do so, gaining an unfair advantage in the




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   market by these acts of unfair competition. Excentus is entitled to injunctive relief, actual

   damages, and punitive damages as a result of these acts of unfair competition.

                                            JURY DEMAND

            Excentus demands a trial by jury.

                                                PRAYER

            WHEREFORE, Excentus respectfully prays that a final judgment be entered and that the

   following relief be granted:

            (1)     Ordering and adjudging that Excentus Corporation have and recover of and from

   Giant Eagle, Inc., David Shapira, and Daniel Shapira, jointly and severally, all the actual,

   compensatory, and exemplary damages pled for herein, costs of suit, lost profits, plus pre-

   judgment and post-judgment interest as allowed by law;

            (2)     Disgorging all profits earned by Giant Eagle, Inc., David Shapira, and Daniel

   Shapira as a result of their breaches of the Shapiras’ duties of loyalty and utmost good faith;

            (3)     Ordering and adjudging that the ‘984 Patent, the ‘128 Patent, and the ‘204 Patent

   are valid and have been and will continue to be infringed by Giant Eagle, Inc.;

            (4)     Ordering an accounting of all damages and that Excentus recover all damages

   sustained as a result of the acts of patent infringement and unfair competition by Giant Eagle,

   Inc.;

            (5)     Ordering preliminary and permanent injunctions enjoining the aforesaid acts of

   infringement and unfair competition by Giant Eagle, Inc., its officers, agents, servants,

   employees, subsidiaries and attorneys, and those persons acting in concert with them, including

   related individuals and entities, customers, representatives, dealers, and distributors;

            (6)     Ordering and adjudging enhanced damages pursuant to 35 U.S.C. § 284 against

   Giant Eagle, Inc.;


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             (7)    Awarding attorneys’ fees pursuant to 35 U.S.C. § 285 or as otherwise permitted

   by law against Giant Eagle, Inc.;

             (8)    Ordering the imposition of a constructive trust as set forth above on the Giant

   Eagle program and all benefits flowing from it;

             (9)    Declaring that Giant Eagle has no patent license of any kind pursuant to the 2002

   Software License and General Services Agreement to use the Excentus Patents; and

             (10)   Awarding Excentus such other and further relief as this Court deems just and

   proper.


   Dated: January 18, 2011                            Respectfully submitted,



                                                      By:    /s/ Brett C. Govett
                                                             Brett C. Govett
                                                             Texas Bar No. 08235900
                                                             Karl G. Dial
                                                             Texas Bar No. 05800400
                                                             FULBRIGHT & JAWORSKI, L.L.P.
                                                             2200 Ross Avenue, Suite 2800
                                                             Dallas, Texas 75201
                                                             Telephone: (214) 855-8000
                                                             Facsimile: (214) 855-8200
                                                             Email: bgovett@fulbright.com
                                                             Email: kdial@fulbright.com

                                                      ATTORNEYS FOR PLAINTIFF EXCENTUS
                                                      CORPORATION

                                       CERTIFICATE OF SERVICE

          The undersigned hereby certifies that all counsel of record who are deemed to have
   consented to electronic service in compliance with Local Rule 5.1(f) are being served with a
   notice of electronic filing of this pleading via the Court’s CM/ECF system in compliance with
   Federal Rule of Civil Procedure 5 and Local Rule LR 5.1.

                                                       /s/ Brett C. Govett
                                                     Brett C. Govett



   95411180.3                                     - 17 -

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Tab C
                                      CAUSE NO. DC-15-03853

DICKSON PERRY, derivatively on behalf  §             IN THE DISTRICT COURT
of EXCENTUS CORPORATION,               §
                                       §
      Plaintiff,                       §
                                       §
v.                                     §          OF DALLAS COUNTY, TEXAS
                                       §
BRANDON LOGSDON, JIM MILLS,            §
GIANT EAGLE, INC., DAVID SHAPIRA, §
DANIEL SHAPIRA, AUTO-GAS               §
SYSTEMS, INC., RANDY NICHOLSON, §
AND ALLIANCE DATA SYSTEMS, INC., §
and EXCENTUS CORPORATION.              §
                                       §
      Defendants.                      §             68TH JUDICIAL DISTRICT
______________________________________________________________________________

         PLAINTIFF’S RESPONSE TO DEFENDANT GIANT EAGLE, INC.’S
                             MOTION TO DISMISS
______________________________________________________________________________

TO THE HONORABLE JUDGE:

          Plaintiff Dickson Perry (“Perry”) responds to Defendant Giant Eagle, Inc. (“Giant Eagle”),

Motion to Dismiss and shows the Court as follows:

                                          INTRODUCTION

          The Court should deny Giant Eagle’s Motion to Dismiss for at least the following three

reasons.

          First, collateral estoppel does not bar Mr. Perry’s claims in this lawsuit because his claims

have never been actually (let alone fully) litigated. Mr. Perry’s lawsuit arises out of scheme by a

cadre of Excentus shareholders, directors and officers during the summer of 2014 – over two

years after the Northern District of Texas issued the opinion that Giant Eagle contends fully

adjudicated these claims. Mr. Perry’s unfair competition claim against Giant Eagle arises out of

its misappropriation of an Excentus trademark and its aiding and abetting flagrant breaches of

______________________________________________________________________________
PLAINTIFF’S RESPONSE TO GIANT EAGLE’S MOTION TO DISMISS                                        Page 1
02708.403/4832-4528-4646, v.2


                                                                                                   R179
fiduciary duties by David and Daniel Shapira. With Giant Eagle’s full help and support, the

Shapiras, while sitting both as directors of Excentus and at the same time being sued by Excentus,

ousted Mr. Perry from Excentus, approved the payment of over $1 million in bonuses to Excentus

officers who conspired to oust Mr. Perry, settled claims against them previously filed by

Excentus, and paid themselves half a million dollars from Excentus’ coffers. Of course, none of

this had occurred when Judge Boyle issued her opinion in 2012, which adjudicated only whether

Excentus’ patent infringement claims (which Mr. Perry does not bring here) “arose from” a pair

of shareholder agreements with a forum-selection clause.

          Second, the SP Agreements’ forum-selection clause does not apply here because Mr.

Perry’s claims do not “arise out of” the SP Agreements. Mr. Perry seeks to vindicate no rights in

the SP Agreements. He was not a party to those agreements, and he alleges no contractual duties

breached. Instead, he sues Giant Eagle and the Shapiras for their breaches of duties imposed by

the Texas common law, to wit, for directors to conduct themselves with utmost loyalty to the

corporation and for companies not to utilize dishonest and illicit means to compete.

          Third, enforcing the forum selection clause would be unreasonable and unjust and would

constitute a serious inconvenience not just to Mr. Perry but to all parties in this litigation as well

as this Court. If this Court dismisses Giant Eagle, then this case would continue against the seven

other defendants and Mr. Perry would have to sue Giant Eagle in Pittsburgh, making the same

allegations. The result would be litigation in two fora involving the same factual allegations and

claims, the same witnesses, and the same relevant evidence. But because of the multiple fora, all

discovery would be undertaken twice (at twice the cost) and all judicial decisions would threaten

inconsistent and conflicting outcomes.

          For these and the reasons identified below, this Court should deny Giant Eagle’s motion.


______________________________________________________________________________
PLAINTIFF’S RESPONSE TO GIANT EAGLE’S MOTION TO DISMISS                                       Page 2
02708.403/4832-4528-4646, v.2


                                                                                                  R180
                                 I.     RELEVANT BACKGROUND

A.        The Perry Lawsuit Arises Out Of Defendants’ Misconduct After Mr. Perry’s
          Termination

          1.        Mr. Perry founded Excentus in 1996 and led it for eighteen years. Under his

leadership, Excentus pioneered fuel rewards programs, whereby consumers could redeem points

earned on retail purchases when buying gas at the pump. See generally First Am. Pet.

          2.        Despite serving as Excentus’ Chief Executive Officer, Chairman of the Board, and

the largest non-corporate shareholder during a period of uninterrupted growth, on July 31, 2014,

Giant Eagle and certain other shareholders, directors, and officers met in secret to oust Mr. Perry.

They reconstituted Excentus’ Board, appointed a new CEO, and in a thirty-second call told Mr.

Perry he was fired and was not to return to Excentus’ premises. With Mr. Perry out of the way,

over the subsequent days and months, each defendant – including the Shapiras and Giant Eagle –

secured for itself monies and benefits at Excentus’ expense.

          3.        At the time Mr. Perry was fired, Excentus had claims pending against Giant Eagle

(an Excentus shareholder that owned grocery stores, gas stations, and a fuel rewards program

called fuelperks!), and David and Daniel Shapira (Giant Eagle representatives appointed to serve

on Excentus’ board). As discussed in greater detail below, those claims pertained to various

broken promises made, and many agreements breached, by Giant Eagle over the course of nearly

a decade. See Ex. 6 to GE Motion (Second Am. Pet.).

          4.        Because David Shapira and Daniel Shapira were defendants, Excentus directors,

and Giant Eagle representatives, Excentus’ outside counsel had prompted the creation of special

executive and litigation committees while the lawsuit was pending. See First Am. Pet. ¶ 35. In

this way, Excentus could make decisions about its business and the litigation without interference

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from conflicted directors. But upon ousting Mr. Perry, one of the Shapiras’ first acts was to

dismantle these committees and request all information regarding them. They then immediately

approved substantial bonuses to all of the company officers and directors who had supported

terminating Mr. Perry – bonuses which Mr. Perry had previously withheld.

          5.        Five days after that, the new CEO, basking in his newly approved bonus and salary

raise, stayed all litigation between the Shapiras, Giant Eagle and Excentus, and the four parties

began negotiating a settlement. See Ex. 2 (Joint Motions to Stay). The Shapiras sat on both sides

of that transaction. As they negotiated a settlement both as Excentus directors and as defendants

sued by Excentus, it was simply impossible for them to act, as it was their obligation to, with

utmost loyalty to Excentus.          The final settlement agreement reflects the Shapiras’ conflict.

Indeed, Defendant Daniel Shapira has himself described that settlement as Excentus dismissing its

lawsuit with prejudice; paying his and his brother’s legal fees; paying licensing fees to Giant

Eagle; and firing Excentus’ CEO. The company he owes his utmost loyalty to, according to

Daniel Shapira, apparently got nothing.

          6.        It is that settlement transaction – infected with horrific conflicts of interest and

self-dealing – and Defendants’ self-dealing in the days and months following it that forms the

nucleus of Mr. Perry’s claims in this lawsuit. Mr. Perry sues the five Excentus officers and

directors behind this transaction (Logsdon, Nicholson, Mills, and the Shapiras) and the three

Excentus shareholders who aided and abetted them (Auto-Gas, ADS, and Giant Eagle) (the “Perry

Lawsuit”).

          7.        Mr. Perry brings two principal claims against Giant Eagle and the Shapiras

(accompanied by certain aiding and abetting and conspiracy claims): breach of fiduciary duty and

unfair competition. Both claims arise from the Shapiras’ and Giant Eagle’s conduct in connection


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with firing Mr. Perry, approving unwarranted bonuses to their fellow conspirators, settling the

pending litigation against themselves, and pilfering and raiding Excentus. See First Am. Pet. ¶ 62

(“[the Shapiras’] conduct in terminating Mr. Perry and the actions they took following that

termination constitute breaches of the duties they owe to Excentus.”); id. ¶ 69 (alleging

misappropriation by Giant Eagle of “Excentus’ customer relationships, prospective business

opportunities, and trademarks . . . when they terminated Mr. Perry and paid themselves off”).

B.        Giant Eagle Competes Unfairly by Misappropriating Excentus’ Fuel Rewards
          Network Trademark.

          8.        Beyond aiding and abetting the Shapiras (and likely as motivation to help them),

Giant Eagle utilized the opportunity created by the Shapiras siting on both sides of the table to

appropriate for its benefit certain valuable assets of Excentus.       Giant Eagle had previously

licensed to Excentus its fuelperks! mark, which Excentus planned to incorporate, as one

participating fuel rewards program among many others, into Excentus’ broader plans for a

national fuel rewards coalition. First Am. Pet. ¶ 32-33. That national coalition, which ultimately

became known as Excentus’ Fuel Rewards Network, would include a wide variety of marks and

programs across the nation, all housed under the umbrella of “Fuel Rewards Network” trademark.

Id.

          9.        To Giant Eagle’s dismay, fuelperks! would be but one among many marks

promoted under the Fuel Rewards Network. Id. Giant Eagle wanted only its brand promoted and

it insisted that Excentus had an obligation to promote only Giant Eagle’s fuelperks! mark.

Incredibly, it was the Shapiras who made these demands – while sitting as directors of Excentus –

on behalf of Giant Eagle. Excentus’ in-house counsel disagreed and explained to Giant Eagle

why Excentus had no obligation to do so but would instead push forward with its Fuel Rewards

Network.

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          10.       Giant Eagle used the settlement transaction and the Shapiras’ disloyalty to illicitly

achieve the goals it had been unable to achieve legally. In the settlement, Mr. Perry alleges that

Giant Eagle “modified the compensation structure of certain royalties for the fuelperks! trademark

and added the Fuel Rewards Network – a mark that Giant Eagle had had no role in developing –

to the marks covered by the agreement so as to require Excentus to pay for its own marks’ use.”

First. Am. Pet. ¶ 60. In other words, Giant Eagle would be paid each time Excentus used its

own Fuel Rewards Network mark.

          11.       It is this allegation in particular that gives rise to Mr. Perry’s unfair competition

claim against Giant Eagle. First Am. Pet. ¶ 75 (“Defendants have gained an unfair advantage in

the market by capitalizing on Excentus’ customer relationships, prospective business

opportunities, and trademarks, which they have misappropriated for their own illicit use when

they terminated Mr. Perry.” (emphasis added)). Significantly, this allegation (like Mr. Perry’s

other allegations) was not — and could not have been — litigated in the case Giant Eagle argues

resolves Mr. Perry’s claims here.

C.        Unlike the Perry Lawsuit, The Excentus Lawsuit Arose Out of The Agreements
          Between Giant Eagle and Excentus, Which Contained a Forum Selection Clause.

          12.       Of course, none of the above-referenced conduct had taken place as of July 2012,

when the Northern District of Texas decided that the appropriate forum for Excentus’ claims

against Giant Eagle and the Shapiras (“Excentus Lawsuit”) was Pittsburgh.                 That lawsuit,

although touching on some background facts also alleged as background in the Perry Lawsuit,

arose out of fundamentally different set of transactions.

          13.       In the Excentus Lawsuit, Excentus sued Giant Eagle for patent infringement and

unfair competition. Excentus premised its unfair competition claim on Giant Eagle “infringing its

patents and gaining access to Excentus’ confidential and proprietary information and technology

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and then using these for Giant Eagle’s benefit and against Excentus in the marketplace . . . .” First

Am. Pet. ¶ 64. Excentus alleged that the Shapiras helped Giant Eagle when they “caused Giant

Eagle to infringe the Excentus Patents.” Id. ¶ 33.

          14.       According to Judge Boyle, the Excentus Lawsuit stemmed from “Excentus’ claims

that Giant Eagle failed to properly support Excentus’ current and future business plans as

required by the parties’ Stock Purchase Agreements and also failed to obtain a license to

Excentus’ patents for use in Giant Eagle's fuelperks! program and failed to pay for such license.”

Excentus Corp. v. Giant Eagle, Inc., 3:11-CV-3331-B, 2012 WL 2525594, at *1 (N.D. Tex. July

2, 2012) (emphasis added). The forum selection clause Giant Eagle advances here is found in

those “Stock Purchase Agreements” identified by Judge Boyle.

          15.       The dispositive element driving the Court’s dismissal of the Excentus Lawsuit was

Excentus’ patent infringement claims and their relationship with the Stock Purchase Agreements.

The Court granted Giant Eagle’s forum motion because Giant Eagle argued “it has a license

granted under the Stock Purchase Agreements, and such license is a complete defense to the

patent infringement claims.” 2012 WL 2525594, at *3 (emphasis added). The Court therefore

concluded that Giant Eagle’s defense – which involved determining “whether the Stock Purchase

Agreements do in fact grant Giant Eagle a license to Excentus’ patents” – “requires the Court to

interpret the Stock Purchase Agreements.”           Id. (emphasis added).    Accordingly, the Stock

Purchase Agreements’ forum clause governed.

          16.       There is no patent infringement claim here. Nor is there a single claim that stems

from patent infringement or even makes a reference to patent infringement. Even if, as Giant

Eagle contends, the Stock Purchase Agreements granted Giant Eagle a license to use Excentus’




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patents, then such grant is no defense to the Shapiras’ conflicts of interest or Giant Eagle’s

misappropriation of Excentus’ trademark rights, as alleged in the Perry Lawsuit.

          17.       Simply put, Mr. Perry’s claims here stem from conduct arising long after Judge

Boyle’s decision. He raises issues and allegations that Excentus (let alone Mr. Perry) could not

have made in the Excentus Lawsuit. The question at issue here is not whether Giant Eagle or

David and Daniel Shapira infringed Excentus’ patents. Instead, the question is whether the

Shapiras, without violating their fiduciary duties, could sit on both sides of a settlement

negotiation when they are fiduciaries of an adverse party. (They could not.) It is also whether

Giant Eagle could connive with the Shapiras to create that situation. (It could not.) Finally, it

also involves whether Giant Eagle and the Shapiras could approve bonuses in excess of $1 million

for the same officers they secretly conspired with to terminate Mr. Perry — bonuses that Mr.

Perry had previously withheld — and subsequently pilfer and raid Excentus without breaching

their fiduciary duties to Excentus. (They could not.)

          18.       Mr. Perry alleges that both the Shapiras and Giant Eagle profited from these

transactions. The Shapiras paid themselves $500,000 and secured broad releases. Giant Eagle

modified the compensation structure in a trademark agreement between Excenuts and a Giant

Eagle affiliate, including by paying itself royalties for a trademark it did not own. They have

taken from Excentus its hard-earned revenue.

D.        Mr. Perry Is Not A Mere Nominal Plaintiff.

          19.       Even though Mr. Perry sues derivatively to undo the settlement agreement, he is

not a mere nominal plaintiff. For purposes of a derivative action in Texas, because Excentus has

fewer than thirty-five shareholders and is not listed on any exchange, Excentus is considered a




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closely held corporation. See TEX. BUS. ORG. CODE § 21.563(a). With respect to such a claim,

the Texas Business Organizations Code provides:

          If justice requires: (1) a derivative proceeding brought by a shareholder of a
          closely held corporation may be treated by a court as a direct action brought by
          the shareholder for the shareholder’s own benefit (2) a recovery in a direct or
          derivative proceeding by a shareholder may be paid directly to the plaintiff or to
          the corporation if necessary to protect the interests of creditors or other
          shareholders of the corporation.

          20.       TEX. BUS. ORG. CODE § 21.563(c). Notably, Mr. Perry holds in excess of 20% of

the outstanding shares of Excentus and is the single largest non-corporate shareholder of

Excentus. Essentially all other shareholders that hold anywhere close to Mr. Perry’s number of

shares are named as defendants in this lawsuit. As a result, to ensure any recovery does not

benefit the same group of shareholders that warranted this lawsuit in the first place, Mr. Perry

may need to request that this Court treat this action “as a direct action brought by the shareholder

for the shareholder’s own benefit,” and that any recovery be “paid directly to the plaintiff.” This

is important, as Mr. Perry was not a party to the first lawsuit.

          21.       As Judge Boyle aptly noted in her forum decision, “whether a forum selection

clause applies to a plaintiff’s claims is a case-specific inquiry.” Id. at *4. The case-specific

inquiry here means this case should stay in Texas.



                                         II.    ARGUMENT


A.        Collateral Estoppel Does Not Bar Mr. Perry’s Claims Because the Issues in the
          Excentus Lawsuit Differ From Those in The Perry Lawsuit.

          Issue preclusion, known as collateral estoppel, “prevents relitigation of particular issues

already resolved in a prior suit.” Barr v. Resolution Trust Corp. ex rel. Sunbelt Fed. Sav., 837

S.W.2d 627, 628 (Tex. 1992). Collateral estoppel applies only when the party asserting it

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establishes: (1) the issue of fact or law sought to be litigated in the second action was fully and

fairly litigated in the first action; (2) that issue of fact or law was essential to the judgment in the

first action; and (3) the party against whom the doctrine is asserted was a party or was in privity

with a party in the first action. See Taylor v. Sturgell, 553 U.S. 880, 892 (2008); Sysco Food

Servs., Inc. v. Trapnell, 890 S.W.2d 796, 801–02 (Tex. 1994). 1

          Collateral estoppel requires that the issue decided in the first action be identical to the

issue in the pending action. See Getty Oil v. Insurance Co. of N. America, 845 S.W.2d 794, 802

(Tex. 1992) (“Although the latter action arose from the same transaction as the former . . . it is

based on a different provision of [the contract] and does not present the same legal issue. As

indicated, collateral estoppel only applies where the identical issue was litigated in the prior

suit.”). It “bars successive litigation of an issue of fact or law actually litigated and resolved in a

valid court determination essential to the prior judgment . . . .” Taylor v. Sturgell, 553 U.S. 880,

892 (2008) (emphasis added) (quotations omitted). The “collateral estoppel analysis . . . [focuses]

only on what was actually litigated and essential to the judgment.” Texas Capital Sec. Mgmt., Inc.

v. Sandefer, 80 S.W.3d 260, 264 (Tex. App.—Texarkana 2002, pet. struck) (emphasis added).

Actual litigation occurs “[w]hen an issue is properly raised, by the pleadings or otherwise, and is

submitted for determination, and is determined.” Van Dyke v. Boswell, O'Toole, Davis &

Pickering, 697 S.W.2d 381, 384 (Tex. 1985) (quoting Restatement (Second) of Judgments § 27

(1982)).

          None of the issues Mr. Perry brings to this court for resolution were fully and fairly

litigated in the Excentus Lawsuit. Indeed, they were not litigated at all. That is because the

questions presented by the Perry Lawsuit – whether the Shapiras engaged in self-dealing in the


          1
         The elements of collateral estoppel are the same under federal and Texas law. John G. & Marie Stella
Kenedy Mem'l Found. v. Dewhurst, 90 S.W.3d 268, 288 (Tex. 2002).
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settlement transaction, whether Giant Eagle competed unfairly when it misappropriated an

Excentus trademark, and whether the bonus and other pay-offs to the various officers and

directors of Excentus violated fiduciary duties – could not have been litigated in the Excentus

Lawsuit. Those events had not yet taken place. Accordingly, collateral estoppel cannot bar Mr.

Perry’s claims.

          Although Mr. Perry’s First Amended Petition does reference and describe some of the

issues that gave rise to the Excentus Lawsuit, that does not transform Mr. Perry’s fundamentally

different claims into the ones at issue in the Excentus Lawsuit. It is certainly true that the

relationship between Excentus, Giant Eagle, and the Shapiras provides some of the factual

backdrop for Mr. Perry’s claims, and may even have some relevance in this litigation. Mr. Perry

merely recounts some of the issues that existed between Excentus and Giant Eagle, and he

explains the Excentus Lawsuit. If the allegations against the Shapiras and Giant Eagle sound

familiar, then that is most likely because the Shapiras and Giant Eagle repeatedly engage in self-

dealing conduct when investing in other companies. This is not the first time the Shapiras and

Giant Eagle have been accused of impropriety with respect to companies they have ownership

in. See, e.g., Exhibit 3, Pittsburgh Post-Gazette Article, August 8, 2014 (“[T]he former CEO of

the Findlay company and his investment group accus[e] Giant Eagle of trying to gain control at a

discount while he was trying to save the company . . . Our clients believe Giant Eagle and its

principals are attempting to hijack one of Pittsburgh’s most promising companies—in an effort to

garner its tremendous value for themselves.”); Exhibit 4, Pittsburgh Business Times, August 13,

2014 (“In exchange for a loan, Giant Eagle laid out a plan that essentially would have given it a

pathway to take all of the assets of the company.”).

          Crucially, it was Excentus’ patent infringement claims in the Excentus Lawsuit that drove


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Judge Boyle’s dismissal, and there is no patent infringement action here. Indeed, the mere fact

that this case is in this Court belies the notion that this is a patent infringement action, as the

federal courts have exclusive jurisdiction when it comes to patent enforcement actions. Try as it

might, Giant Eagle cannot transform Mr. Perry’s pleading into a patent infringement claim; there

is no such claim in Mr. Perry’s lawsuit. As a result, the SP Agreements cannot bar Mr. Perry’s

claims. Other than providing some background facts about the Excentus-Giant Eagle relationship,

the SP Agreements do not play a dispositive role in this case.

          It is also worth noting that collateral estoppel also fails to dispose of Mr. Perry’s claims

here because Mr. Perry was not a party to the Excentus Lawsuit. While Mr. Perry brings claims

derivatively on behalf Excentus, because Excentus is a closely held corporation, he can and will

seek recovery personally in this case. This is another reason why this case is not an instance of

the same party bringing the same claims against the same defendants.

          Because the issues presented by Mr. Perry’s claims here were not fully and fairly litigated

in the Excentus Lawsuit, and because the issues in the two cases are not identical, collateral

estoppel does not bar Mr. Perry’s claims.


B.        The Stock Purchase Agreement’s Forum-Selection Clause Does Not Apply to Mr.
          Perry’s Claims.

          1)        Mr. Perry’s Claims Do Not “Arise Out Of” the Stock Purchase Agreement.

          “When a party seeks to enforce a forum-selection clause, a trial court must first determine

whether the asserted claims fall within the scope of that clause.” See In re TCW Global Project

Fund II, Ltd., 274 S.W.3d 166, 169 (Tex. App.—Houston [14th Dist.] 2008, orig. proceeding).

Forum-selection clauses are creatures of contract, and principles of contract interpretation must be

applied. RSR Corp. v. Siegmund, 309 S.W.3d 686, 700 (Tex. App.—Dallas 2010, no pet.). Under


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such principles, terms are given their plain, ordinary, and generally accepted meaning. See

Valence Operating Co. v. Dorsett, 164 S.W.3d 656, 662 (Tex. 2005).

          In determining whether claims fall within the scope of a forum-selection clause, courts

utilize a “common-sense” examination of the claims and the clause to determine if the claim fall

within the scope of the clause. Siegmund, 309 S.W.3d at 700. Courts “consider whether a

claimant seeks a direct benefit from a contract and whether the contract or some other general

legal obligation establishes the duty at issue.” In re Prime Ins. Co., 13-14-00490-CV, 2014 WL

5314514, at *4 (Tex. App.—Corpus Christi Oct. 16, 2014, no pet.) (citing In re Fisher, 433

S.W.3d 523, 529–30 (Tex. 2014) (orig. proceeding)). Mr. Perry’s claims do not “arise out of” the

SP Agreements for at least the following reasons.

          First, arise means “to originate or stem from or to result from.”         BLACK’S LAW

DICTIONARY 129 (10th ed. 2014). As already described in detail, Mr. Perry’s claims do not

originate or stem from the SP Agreements. The simple and ordinary meaning of this provision

disposes of Giant Eagle’s argument.

          Second, Mr. Perry does not seek “a direct benefit from” the SP Agreements. Indeed, he

does not seek to benefit at all from them.

          Third, the SP Agreements do not establish duties and obligations breached by Giant Eagle

and they are not the source of the right that Mr. Perry seeks to vindicate; the source is Texas law.

See generally U.S. Sporting Prods., Inc. v. Johnny Stewart Game Calls, Inc., 865 S.W.2d 214,

217 (Tex. App.—Waco 1993, writ denied) (citations omitted) (“The law of unfair competition is

the umbrella for all statutory and nonstatutory causes of action arising out of business conduct

which is contrary to honest practice in industrial or commercial matters.”). Texas law also clearly

delineates the duties directors owe to the companies and shareholders they serve.


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          Fourth, even if Mr. Perry’s claims could be somehow twisted to “relate to” the SP

Agreements, that is not enough to bring his claims within the scope of the forum clause. To the

contrary, the lack of any “related to” language implies that the signing parties intended to restrict

the clause to claims that directly arose out of the agreement. See Overseas Ventures, LLC v. ROW

Mgmt., Ltd., Inc., No. 12 CIV. 1033 PAE, 2012 WL 5363782, at *7 (S.D.N.Y. Oct. 26, 2012)

(“Those words ‘arise out of’ do not encompass all claims that have some possible relationship

with the contract, including claims that may only relate to, be associated with, or arise in

connection with the contract.”).

          Simply put, Mr. Perry’s claims against Giant Eagle and the Shapiras do not arise out of the

SP Agreements. As a result, the SP Agreement’s forum selection clauses do not apply to Mr.

Perry’s claim.

          2)        Mr. Perry Was Not A Signatory of the Stock Purchase Agreement and Cannot
                    Be Bound By It.

          When a party seeks to enforce a forum-selection clause against a nonsignatory to a

contract containing a forum-selection clause, that party bears the burden to prove the theory upon

which it relies to bind the nonsignatory to the forum-selection clause. CNOOC Se. Asia Ltd. v.

Paladin Res. (SUNDA) Ltd., 222 S.W.3d 889, 895 (Tex. App.—Dallas 2007, pet. denied). Giant

Eagle and the Shapiras wholly fail to put forth any theory as to why Mr. Perry would be bound

here given that this is a derivative suit about a close corporation, which means any recovery

would flow to him personally and not to the corporation. Giant Eagle submits no evidence or

argument in this regard, and it therefore fails to carry its burden.


C.        Even if the Stock Purchase Agreement’s Forum-Selection Clause Applies to These
          Claims, It Would Be Manifestly Unjust to Enforce It.

          Even if this Court found that Mr. Perry’s claims “arise out of” the SP Agreements, the

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Court should nonetheless not enforce the clause due to the extraordinary circumstances presented

here. A forum-selection clause will not be enforced if “enforcement would be unreasonable or

unjust . . . [or] the selected forum would be seriously inconvenient for trial.” In re Intern. Profit

Associates, Inc., 286 S.W.3d 921, 923 (Tex. 2009) (emphasis added). 2 This is a highly case-

specific and flexible inquiry without a bright-line test. Courts will consider multiple factors to

determine if enforcement, under the particular circumstances of the extant case, is unreasonable or

unjust or presents serious inconvenience.

          Whether a forum-selection clauses’ enforcement was foreseeable in the particular

circumstances at issue is a key component of this analysis. The Texas Supreme Court has

explained that parties are protected from enforcement in “controvers[ies] that the parties could

never have had in mind” when signing a forum selection clause. See In re ADM Investor

Services, Inc., 304 S.W.3d 371, 376 (Tex. 2010) (describing the Supreme Court’s decision in M/S

Bremen). So important is foreseeability that even a party who signs and is actually bound to a

forum selection clause (which Mr. Perry is not) can demonstrate “special and unusual

circumstances developed after the contract was executed” that cause litigation to be so “gravely

difficult and inconvenient that [they] would for all practical purposes be deprived of their day in

court.” In re Zotec Partners, LLC, 353 S.W.3d 533, 536-37 (Tex. App.—San Antonio 2011, no

pet.) (emphasis added).

          The circumstances presented here were assuredly not foreseeable a decade ago when

Excentus (not Mr. Perry) and Giant Eagle entered into the SP Agreements. Mr. Perry could never

have foreseen (and did not, in fact, foresee) that an agreement he is not a party to would be

asserted against him over a decade later when he was no longer even employed at Excentus in a

          2
             The Supreme Court of Texas has adopted the federal analysis to determine the enforceability of
forum-selection clauses and whether a clause is unreasonable. Michiana Easy Livin' Country, Inc. v. Holten, 168
S.W.3d 777, 793 (Tex.2005).
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lawsuit he brought that asserts no claims “arising out of” the SP Agreements. See Exhibit 1

(Perry Affidavit). When negotiating the SP Agreements, at no point was there any discussion

regarding any binding impact that agreement could or would have on Mr. Perry himself in his

personal capacity. Id. Nowhere on the SP Agreements themselves is there any circumstance

referenced that even remotely could extend to the facts at issue here. For an SP Agreement that

he is not a party to and does not seek to enforce to haul his claims to a court thousands of miles

away is not only unforeseeable but manifestly unreasonable.

          Additionally, if the selected forum presents serious inconvenience to the party sought to be

bound is also a component of enforceability. Forum-selection clauses can be avoided “if the

chosen forum is so inconvenient that enforcing the clause would produce an unjust result.” In re

Emex Holdings L.L.C., 13-11-00145-CV, 2013 WL 1683614, at *9 (Tex. App.—Corpus Christi

Apr. 18, 2013, no pet.) (citing In re ADM Investor Services, Inc., 304 S.W.3d 371, 375 (Tex.

2010)). Courts must weigh “in the balance the convenience of the witnesses and those public-

interest factors of systemic integrity and fairness, that, in addition to private concerns, come under

the heading of the interests of justice.’” Byrd v. Admiral Moving & Storage, Inc., 355 F. Supp. 2d

234, 237-38 (D.D.C. 2005) (refusing to enforce forum-selection clause because plaintiff would

have incurred unreasonable expenses by transferring forums) (quoting Stewart Organization, Inc.

v. Ricoh Corp., 487 U.S. 22, 29 (1988)).

          Thus, a second and equally compelling reason to keep this action in this Court are the

consequences flowing from enforcing the forum selection clause. If this Court dismisses Giant

Eagle, then Mr. Perry, to enforce his rights, would have to sue Giant Eagle in Pittsburgh. But this

action would continue, as there are seven other defendants. And the claims would not change, as

Mr. Perry also sues those other defendants over their conduct in the days and months following


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his termination as CEO. As the District of Columbia explained in similar circumstances, where a

plaintiff’s claims against other defendants would remain in the first forum after transferring the

claims against one defendant due to a forum selection clause, “[i]t would ‘flout the theory of

judicial economy’ to transfer the action . . .” Byrd, 355 F. Supp. 2d at 238.

          Consequently, the very result that Courts go to great lengths to avoid – related litigation in

multiple forums with the potential for inconsistent results – will happen here. This result would

be wholly contrary to one of the very aims of forum selection clauses. See Carney v. Beracha,

996 F. Supp. 2d 56, 71 (D. Conn. 2014) (holding that enforcing forum-selection clause would be

unreasonable because it would require litigation in multiple fora and require multiple courts to

adjudicate claims covering only portions of each transaction); First Interstate Credit Alliance, Inc.

v. Alliance Leasing, Inc., No. 89-CV-4038, 1990 WL 67445, at *5 (S.D.N.Y. May 15, 1990)

(declining to enforce forum selection clause where it appeared likely that the same issues would

be litigated in multiple fora). See also Rationis Enterprises, Inc. of Panama, Lim. Procs. M/V

MSC Carla, No. 97-CV-9052, 1999 WL 6364, at *3 (S.D.N.Y. Jan.7, 1999) (distinguishing cases

enforcing forum selection clause due to “size and complexity” of case at issue). In short, at least

two courts would have to hear the very same claims involving the very same parties and the same

facts at the same time. Such a result constitutes the sort of seriously inconvenient outcome that

warrants rejecting a forum selection clause.

          Finally, the Court should not ignore the substantial personal inconvenience to be suffered

by Mr. Perry. See Exhibit 1 (Perry Affidavit). Excentus, its directors, and certain shareholders

seek to impose financial and logistical burdens on Mr. Perry at every turn, while Mr. Perry seeks

to act in the best interests of Excentus — the company he founded and led for over 18 years.

Excentus — without any notice or chance to cure — wrongfully terminated the only source of


______________________________________________________________________________
PLAINTIFF’S RESPONSE TO GIANT EAGLE’S MOTION TO DISMISS                                       Page 17
02708.403/4832-4528-4646, v.2


                                                                                                    R195
employment income Mr. Perry had for nearly two decades, as well as Mr. Perry’s health care

(despite knowledge that Mr. Perry’s family suffers from chronic healthcare conditions). Mr.

Perry has had to bring a breach of contract claim against Excentus in arbitration because Excentus

refused to pay him the compensation contractually owed to him upon his termination.                  Id.

Excentus also refused, despite past practice and the clear language of the Excentus Bylaws and

Articles of Incorporation, to pay for Mr. Perry’s attorneys’ fees in connection with a lawsuit

where Mr. Perry was sued in his capacity as an officer of Excentus. In a detailed ruling, the 162nd

District Court had to issue a temporary injunction ordering Excentus to pay Mr. Perry’s fees. See

Exhibit 5. On the other hand, every single Defendant in this suit is most likely having their

attorneys’ fees paid by Excentus. If Giant Eagle is dismissed, Mr. Perry would have to personally

bear the substantial financial and logistical burden of litigating in three different fora, including by

having to retain additional counsel in Pittsburgh. This substantial personal inconvenience and

injustice is yet another reason for the Court to deny enforcement of the forum-selection clause in

the unlikely instance that this Court finds it applicable here.

                                III.   CONCLUSION AND PRAYER

          For the foregoing reasons, Plaintiff respectfully requests that the Court deny Giant Eagle’s

Motion to Dismiss. Plaintiff further requests any additional relief to which he may show himself

entitled.




______________________________________________________________________________
PLAINTIFF’S RESPONSE TO GIANT EAGLE’S MOTION TO DISMISS                                       Page 18
02708.403/4832-4528-4646, v.2


                                                                                                    R196
Date: August 14, 2015                Respectfully submitted,

                                     /s/Michael P. Lynn
                                     Michael P. Lynn, P.C. (mlynn@lynnllp.com)
                                     State Bar No. 12738500
                                     Andrés Correa (acorrea@lynnllp.com)
                                     State Bar No. 24076330
                                     Andrew S. Hansbrough (ahansbrough@lynnllp.com)
                                     State Bar No. 24094700
                                     LYNN TILLOTSON PINKER & COX, LLP
                                     2100 Ross Avenue, Suite 2700
                                     Dallas, Texas 75201
                                     214-981-3800 Telephone
                                     214-981-3839 Facsimile

                                     ATTORNEYS FOR PLAINTIFF
                                     DICKSON PERRY




______________________________________________________________________________
PLAINTIFF’S RESPONSE TO GIANT EAGLE’S MOTION TO DISMISS                    Page 19
02708.403/4832-4528-4646, v.2


                                                                               R197
                                CERTIFICATE OF SERVICE

      The undersigned hereby certifies that a true and correct copy of the above and foregoing
document has been served as shown below on counsel of record on August 14, 2015:

Via Email                                         Via Email
Orrin L. Harrison III                             Lisa S. Gallerano
(oharrison@ghjhlaw.com)                           (lgallerano@akingump.com)
GRUBER HURST ELROD JOHANSEN HAIL                  Patrick O’Brien (pobrien@akingump.com)
SHANK, LLP                                        AKIN GUMP
1445 Ross Avenue, Suite 2500                      1700 Pacific Avenue, Suite 4100
Dallas, TX 75202                                  Dallas, TX 75201-4624
Attorneys for Defendants                          Attorneys for Defendant
Giant Eagle, Inc., David Shapira, and             Alliance Data Systems, Inc.
Daniel Shapira
                                                  Via Email
Via Email                                         Ken Carroll (kcarroll@ccsb.com)
Bernard Marcus (marcus@marcus-                    Byran Erman (berman@ccsb.com)
shapira.com)                                      Sara Romine (sromine@ccsb.com)
Scott Livingston (livingston@marcus-              CARRINGTON, COLEMAN, SLOMAN &
shapira.com)                                      BLUMENTHAL, L.L.P.
Jonathan Marcus (jmarcus@marcus-                  901 Main Street, Suite 5500
shapira.com)                                      Dallas, TX 75202-3767
MARCUS & SHAPIRA LLP                              Attorneys for Defendants
301 Grant Street, 35th Floor                      Brandon Logsdon and Jim Mills
One Oxford Centre
Pittsburgh, PA 15219-6401
Attorneys for Defendants
Giant Eagle, Inc., David Shapira, and
Daniel Shapira


Via Email
Robert B. Wagstaff (rwagstaff@mcmahonlawtx.com)
MCMAHON SUROVIK SUTTLE
P.O. Box 3679
Abilene, TX 79604
Attorney for Defendants
Randy Nicholson and Auto-Glass Systems, Inc.

                                           /s/ Andres Correa
                                           Andres Correa



4832-4528-4646, v. 2


______________________________________________________________________________
PLAINTIFF’S RESPONSE TO GIANT EAGLE’S MOTION TO DISMISS                              Page 20
02708.403/4832-4528-4646, v.2


                                                                                          R198
EXHIBIT 1



            R199
                                     CAUSE NO. DC-15-03853

                                  §
DICKSON PERRY, derivatively on behalf                               IN THE DISTRICT COURT
of EXCENTUS CORPORATION,          §
                                  §
     Plaintiff,                   §
                                  §
v.                                §                             OF DALLAS COUNTY, TEXAS
                                  §
BRANDON LOGSDON, JIM MILLS,       §
GIANT EAGLE, INC., DAVID SHAPIRA, §
DANIEL SHAPIRA, AUTO-GAS          §
SYSTEMS, INC., RANDY NICHOLSON, §
AND ALLIANCE DATA SYSTEMS, INC., §
AND EXCENTUS CORPORATION,         §
                                  §
     Defendants.                  §                                 68TH JUDICIAL DISTRICT


                                AFFIDAVIT OF DICKSON PERRY


         BEFORE ME, the undersigned authority, on this day personally appeared Dickson Perry,

who is known to me and who, after having been by me duly sworn according to law upon his

oath, deposed and said:

         1.        My name is Dickson Perry. I am over 21 years of age, of sound mind, have never

been convicted of any felony, and fully competent to make this affidavit. I have personal

knowledge of all of the facts stated herein, and they are true and correct.

         2.        I founded Excentus Corporation ("Excentus") and served as its Chairman of the

Board and Chief Executive Officer from 1996 until 2014. Excentus was my only source of

employment income for myself and for my family during that time.

         3.        On August 1, 2014, I received a phone call from certain Excentus officers in

which they told me that I was terminated from all of my positions at Excentus. I had received no


AFFIDAVIT OF DICKSON PERRY                                                                Page 1
2708-403/4819-9977-0918



                                                                                Exhibit 1

                                                                                                    R200
notice in advance of any concerns about my perfonnance as CEO or about my work for Excentus

from Excentus' management. Excentus' management never warned me that there was a risk that

I would be tenninated from Excentus. As a result, the call on August 1, 2014 was completely

unexpected.

          4.       I had an employment contract with Excentus that required that certain

compensation be paid to me upon my tennination without cause. Excentus contended that I was

terminated for cause, however, and refused to pay me any compensation upon my tennination.

Excentus cut off all of my benefits, including my health benefits, despite Excentus being aware

that two of my children suffer from serious, chronic illnesses.        My employment agreement

contained an arbitration clause, and I therefore had to bring a breach of contract claim against

Excentus in arbitration in Dallas, Texas. That claim is pending and is presently still in the

discovery phase.

         5.        Following my tennination, it became necessary for me to sell our home in Dallas.

I have been unable to obtain alternate employment since my tennination from Excentus. At

present, I am engaged in starting a new business in Canton, Mississippi, which is my home state.

I am therefore residing in Canton. That new business has not yet generated any income for me

and it is not expected to generate any income for me for the foreseeable future.

         6.        On December 2, 2011, Excentus filed claims against Giant Eagle, Inc. ("Giant

Eagle") and David and Daniel Shapira (the "Shapiras") in the U.S. District Court for the

Northern District of Texas. Every Excentus board member (other than the Shapiras), as well as

members of Excentus' management, participated in discussions about whether litigation was

necessary to resolve the issues between Excentus, Giant Eagle, and the Shapiras.             Every


AFFIDAVIT OF DICKSON PERRY                                                                  Page 2
2708-403/4819-9977-0918




                                                                                                      R201
 Excentus board member (other than the Shapiras) and senior members of Excentus' management

participated in the decision to file claims against Giant Eagle and the Shapiras. Those claims

were filed in consultation with both in-house counsel for Excentus and external counsel at

Fulbright Jaworski (now Norton Rose Fulblight).            Further, Excentus created a Litigation

Committee to consult with counsel, review certain questions presented, and make certain

decision about the litigation against Giant Eagle and the Shapiras. I was not a member of the

Litigation Committee.

          7.       While the litigation was ongoing, Excentus' in-house counsel was involved and

aware at all times of the progression of the litigation. Further, Excentus' board members (other

than the Shapiras), as well as senior management, were kept apprised and updated of the

progression of the litigation.

         8.        I brought no claims against Giant Eagle and the Shapiras in my personal capacity.

I have never, until the above-captioned matter, sued Giant Eagle and the Shapiras.

         9.        My claims in the above-captioned matter arise out of the defendants' conduct in

the days and months following my termination, including without limitation the settlement

agreement between Excentus, Giant Eagle, and the Shapiras.

          10.      I signed the 2004 Series A Preferred Stock Purchase Agreement and the 2005

Series B Preferred Stock Purchase Agreement (together, the "SPAs") in my capacity as CEO of

Excentus. Those agreements were reviewed by co\lllsel for Excentus. I did not have counsel

representing me review those agreements. I did not Wlderstand, either at that time or now, any

aspect of those agreements to create any obligations on me personally as to where I would have

to file any claims should there be a dispute related to those agreements or a dispute unrelated to


AFFIDAVIT OF DICKSON PERRY                                                                   Page3
2708·403/4819·9977·0918




                                                                                                       R202
those agreements. Further, at the time that these agreements were negotiated, I did not foresee

any dispute between me in my personal capacity (or Excentus, for that matter) and Giant Eagle

or the Shapiras.

          11.      I never expected or foresaw that a forwn selection clause in the SPAs could bind

me personally to litigate any personal claims in a particular forum. I never foresaw having to

bring any claims against Giant Eagle and the Shapiras in my personal capacity, and even if suing

them was ever necessary, I would expect that, given their substantial business activities in Texas,

I would be able to do so in Texas.

          12.      If Giant Eagle and the Shapiras are dismissed from this lawsuit, I would have to

bring the same claims against them in Pittsburgh. Having to do so would result in a substantial,

and completely unforeseeable, burden to myself. I have no personal connection to Pittsburgh. I

have never lived there and have no business there. I would have to find additional counsel to

represent me in Pittsburgh.         Because I would continue prosecuting my claims against the

remaining defendants in the above-captioned matter, any new counsel in Pittsburgh would have

to begin repeating the work that my counsel in Texas has done so far.                This would create

duplicative and unnecessary costs - which are a significant and unforeseeable burden, given that

I was terminated from the only job I held for 18 years - as well as the potential for lack of

coordination and inconsistent positions and results in the Pittsburgh and Dallas litigation.

         13.       Having to litigate in arbitration, in Dallas District Court, and in Pittsburgh creates

an immense burden upon my time and resources. Litigating both in arbitration and in Dallas

District Court already creates a significant burden given my residence in Canton. If they are

dismissed from this lawsuit, to enforce my rights I would have to file claims against Giant Eagle



AFFIDAVIT OF DICKSON PERRY                                                                        Page4
2708-40314819-9977-0918




                                                                                                            R203
and the Shapiras in Pittsburgh. However, in light of the ongoing costs of arbitration and the

above-captioned matter, as well as the substantial additional costs that would result from having

to retain new counsel in Pittsburgh and all attendant travel and litigation costs, I may not be able

to file such litigation to enforce my rights because the expense and burden would be prohibitive.

          14.      In this scenario, I do not know how I could enforce my personal rights as a

shareholder of Excentus, or those of Excentus, against Giant Eagle and the Shapiras.




AFFIDAVIT OF DICKSON PERRY                                                                  Pages
2708403/4819-9977-0918




                                                                                                       R204
          FURTHER AFFIANT SAYETH NOT.




         SUBSCRIBED AND SWORN TO BEFORE ME on this the        J.j_ day of August, 2015,
to certify which witness my hand and official s


               KARRIE l STOVALL
             IWY Commission Expires
                  April 6,-201Q
                                      Notary Public in and for the State o




4819-9977-0918, v. 1




AFFIDAVIT OF DICKSON PERRY                                                       Page6
2708-403/4819-9977-0918




                                                                                          R205
EXHIBIT 2



            R206
  Case 3:14-cv-01195-B Document 86 Filed 08/06/14                    Page 1 of 3 PageID 3382



                       IN THE UNITED STATES DISTRICT COURT
                       FOR THE NORTHERN DISTRICT OF TEXAS
                                 DALLAS DIVISION

   GIANT EAGLE, INC.,                             )
                                                  )
                  Plaintiff,                      ) CIVIL ACTION NO. 3:14-cv-01195
                                                  )
          vs.                                     )
                                                  )
   EXCENTUS CORPORATION,                          )
                                                  )
                  Defendant.                      )

                       AGREED MOTION TO STAY PROCEEDING

       Recent discussions between Plaintiff Giant Eagle, Inc. and the new Chief Executive

Officer of Defendant Excentus Corporation (collectively, “the parties”) suggest that the parties

may be able to reach a settlement agreement without incurring additional litigation expenses or

taking up any more of the Court’s time. Therefore, the parties jointly request that the Court use

its inherent power to stay these proceedings for ninety (90) days.



Dated: August 6, 2014

Respectfully submitted,

/s/ Bernard D. Marcus                             /s/ Brett C. Govett
Orrin L. Harrison, III                            Brett C. Govett
Texas Bar No. 09130700                            Texas Bar No. 08235900
oharrison@ghjhlaw.com                             brett.govett@nortonrosefulbright.com
Mark L. Johansen                                  Michael B. Regitz
Texas Bar No. 10670240                            Texas Bar No. 24051238
mjohansen@ghjhlaw.com                             mike.regitz@nortonrosefulbright.com
Anthony J. Magee                                  Jason Jordan
Texas Bar No. 00786081                            Texas Bar No. 24078760
amagee@ghjhlaw.com                                jason.jordan@nortonrosefulbright.com
Jonathan R. Childers                              Patrick Courtney
Texas Bar No. 24050411                            Texas Bar No. 24087351
jchilders@ghjhlaw.com                             patrick.courtney@nortonrosefulbright.com


 ____________________________________________________________________________________________

AGREED MOTION TO STAY PROCEEDING                                                         PAGE 1
                                                               Exhibit 2
                                                                                               R207
   Case 3:14-cv-01195-B Document 86 Filed 08/06/14            Page 2 of 3 PageID 3383



GRUBER HURST JOHANSEN HAIL SHANK LLP           FULBRIGHT & JAWORSKI, LLP
1445 Ross Avenue, Suite 2500                   2200 Ross Avenue, Suite 2800
Dallas, TX 75202                               Dallas, TX 75201
Telephone: (214) 855-6800                      Telephone: (214) 855-8000
Facsimile: (214) 855-6808                      Facsimile: (214) 855-8200

Bernard D. Marcus (pro hac vice)               Counsel for Defendant
marcus@marcus-shapira.com
Robert M. Barnes (pro hac vice)
rbarnes@marcus-shapira.com
Scott D. Livingston (pro hac vice)
livingston@marcus-shapira.com
Jonathan D. Marcus (pro hac vice)
jmarcus@marcus-shapira.com

MARCUS & SHAPIRA LLP
One Oxford Centre, 35th Floor
301 Grant Street
Pittsburgh, PA 15219
Telephone: (412) 471-3490
Facsimile: (412) 391-8758

Counsel for Plaintiff




 ____________________________________________________________________________________________

AGREED MOTION TO STAY PROCEEDING                                                      PAGE 2
                                                                                          R208
  Case 3:14-cv-01195-B Document 86 Filed 08/06/14               Page 3 of 3 PageID 3384



                            CERTIFICATE OF CONFERENCE

        Pursuant to LOCAL CIVIL RULE 7.1(b), on August 5, 2014, a member of counsel for
Plaintiff and a member of counsel for Defendant conferred regarding this Motion. Counsel for
Defendant AGREES to the request set forth herein.

       Certified to on August 6, 2014, 2014, by

                                            /s/ Bernard D. Marcus
                                            Bernard D. Marcus




                               CERTIFICATE OF SERVICE

       On August 6, 2014, I electronically submitted the foregoing document with the clerk of
court for the U.S. District Court, Northern District of Texas, using the electronic case files
system of the court. The electronic case files system sent a “Notice of Electronic Filing” to the
attorneys entitled to notice who are registered users of ECF.



                                                    /s/ Bernard D. Marcus
                                                    Bernard D. Marcus




____________________________________________________________________________________________

AGREED MOTION TO STAY PROCEEDING                                                         PAGE 3
                                                                                              R209
         Case 2:13-cv-00178-JFC Document 213 Filed 08/06/14 Page 1 of 3



                     IN THE UNITED STATES DISTRICT COURT
                  FOR THE WESTERN DISTRICT OF PENNSYLVANIA

 EXCENTUS CORPORATION,                           )
                                                 )
                Plaintiff,                       ) CASE NO. 2:13-CV-00178-JFC
                                                 )
        vs.                                      )
                                                 )
 GIANT EAGLE, INC., DAVID SHAPIRA                )
 and DANIEL SHAPIRA,                             )
                                                 )
                Defendants.                      )

                                 JOINT MOTION TO STAY

       Recent discussions between the new Chief Executive Officer of Plaintiff Excentus

Corporation and Defendants Giant Eagle, Inc., David Shapira, and Daniel Shapira (collectively,

“the parties”) suggest that the parties may be able to reach a settlement agreement without

incurring additional litigation expenses or taking up any more of the Court’s time. Therefore, the

parties jointly request that the Court use its inherent power to stay these proceedings for ninety

(90) days.

Dated: August 6, 2014                            Respectfully submitted,

/s/ Brett C. Govett                              /s/ Jonathan D. Marcus
Jeremy A. Mercer (PA ID No. 86480)               Bernard D. Marcus (PA ID No. 01293)
FULBRIGHT & JAWORSKI LLP                         Scott D. Livingston (PA ID No. 60649)
Southpointe Energy Complex                       Jonathan D. Marcus (PA ID No. 312829)
370 Southpointe Blvd., Suite 300                 MARCUS & SHAPIRA LLP
Canonsburg, PA 15317                             One Oxford Centre, 35th Floor
Telephone: (724) 416-0400                        301 Grant Street
Facsimile: (724) 416-0404                        Pittsburgh, PA 15219
jeremy.mercer@nortonrosefulbright.com            Telephone: (412) 471-3490
                                                 Facsimile: (412) 391-8758
                                                 marcus@marcus-shapira.com
                                                 livingston@marcus-shapira.com
                                                 jmarcus@marcus-shapira.com



                                                                                              R210
        Case 2:13-cv-00178-JFC Document 213 Filed 08/06/14 Page 2 of 3



Brett C. Govett                        David V. Radack (PA ID No. 39633)
Michael B. Regitz                      Mark A. Willard (PA ID No. 18103)
FULBRIGHT & JAWORSKI LLP               Eckert, Seamans, Cherin & Mellott, LLC
2200 Ross Avenue, Suite 2800           600 Grant Street, 44th Floor
Dallas, Texas 75201                    Pittsburgh, PA 15219
Telephone: (214) 855-8000              (412) 566-6000
Facsimile: (214) 855-8200              (412) 566-6099 (Facsimile)
brett.govett@nortonrosefulbright.com   dradack@eckertseamans.com
mike.regitz@nortonrosefulbright.com    mwillard@eckertseamans.com

Counsel for Plaintiff                  Counsel for Defendants
Excentus Corporation                   Giant Eagle, Inc., Daniel Shapira and David Shapira




                                       2
                                                                                      R211
         Case 2:13-cv-00178-JFC Document 213 Filed 08/06/14 Page 3 of 3



                                 CERTIFICATE OF SERVICE

       On August 6, 2014, I electronically submitted the foregoing document with the clerk of

court for the U.S. District Court, Western District of Pennsylvania, using the electronic case files

system of the court. The electronic case files system sent a “Notice of Electronic Filing” to the

attorneys entitled to notice who is a registered user of ECF.




                                                      /s/ Jonathan D. Marcus
                                                      Jonathan D. Marcus




                                                 3
                                                                                                    R212
EXHIBIT 3



            R213
Business - Pittsburgh Post-Gazette                                                         Page 1 of 2




 Battle over control of robotics company
 Seegrid heads to court
 August 8, 2014 12:00 AM

 By Teresa F. Lindeman / Pittsburgh Post-Gazette

 A boardroom battle over control of a robotics vehicle business with Carnegie Mellon University
 ties has ended up in court, with the former CEO of the Findlay company and his investment group
 accusing Giant Eagle of trying to gain control at a discount while he was trying to save the
 company.


 In a lawsuit filed this week in Allegheny County Court of Common Pleas, Anthony Horbal, who
 became CEO of Seegrid Corp. in 2012, said the O’Hara grocer blocked his efforts to bring in
 outside capital even as the company faced a cash shortage that threatens its future.


 “Our clients believe Giant Eagle and its principals are attempting to hijack one of Pittsburgh’s
 most promising companies — in an effort to garner its tremendous value for themselves,” said
 William A. Brewer III, partner at Bickel & Brewer in Dallas and lead counsel for plaintiffs, in an
 email. “Our clients believe that Giant Eagle took direct aim at them, and took steps to force them
 out of the company they helped build.”


 Since at least April, the lawsuit said, the Seegrid board and Giant Eagle have known that “by mid-
 July, if not sooner, Seegrid would face a cash shortage that would threaten its ability to continue
 to conduct business.”


 A Giant Eagle spokesman said the company is confident the case will be dismissed.


 “As the majority shareholder in Seegrid Corp., Giant Eagle continues to believe that Seegrid can
 be a successful company. Contrary to the allegations in the complaint, Giant Eagle has always
 acted appropriately as a Seegrid shareholder. The complaint was filed on behalf of a disgruntled
 former CEO, and it contains numerous material misstatements and is wholly without merit,” said
 Rob Borella, senior director of corporate communications, in an email.


                                                                                    Exhibit 3

http://www.post-gazette.com/business/2014/08/08/Battle-over-control-of-robotics-compan... 7/13/2015
                                                                                                      R214
Business - Pittsburgh Post-Gazette                                                        Page 2 of 2



 The lawsuit seeks injunctive relief to keep Giant Eagle from “interfering with the management
 agreement,” in addition to an unspecified amount of damages.


 The lengthy court filing describes a startup founded in 2003 by CMU robotic scientists Hans
 Moravec and Scott Friedman. The company makes robotic vehicles that can handle tasks in
 industrial settings, according to Seegrid’s website.


 Seegrid was initially funded with by a small group of investors and a contract from Samsung,
 according to the lawsuit. Giant Eagle tested Seegrid’s prototype robots in its warehouse, according
 to the suit, and was asked by Mr. Friedman to invest.


 Mr. Horbal came in December, investing $3 million in return for 20 percent ownership,
 according to the lawsuit. A past Seegrid press release indicate he sold his own business, Three
 Rivers Health Plan, to United Health Plans in 2008. At Seegrid, he started as president and a
 director.


 Horbal’s group’s ownership interest at this point is between 15 percent and 16 percent, the lawsuit
 said. Giant Eagle, the lawsuit said, would own more than 60 percent of Seegrid, if it converted its
 notes into stock.


 Mr. Horbal felt Seegrid needed a cash infusion of $10 million to $20 million, but claimed Giant
 Eagle and its representatives have been threatening to liquidate Seegrid unless the board agrees
 to turn the operation into a subsidiary of Giant Eagle.




http://www.post-gazette.com/business/2014/08/08/Battle-over-control-of-robotics-compan... 7/13/2015
                                                                                                   R215
EXHIBIT 4



            R216
Second suit filed in legal battle between ousted Seegrid CEO, Giant Eagle - Pittsburgh Bu... Page 1 of 2




 From the Pittsburgh Business Times
 :http://www.bizjournals.com/pittsburgh/news/2014/08/13/second-suit-filed-
 in-legal-battle-between-ousted.html



 Second suit filed in legal battle between
 ousted Seegrid CEO, Giant Eagle
 Aug 13, 2014, 12:40pm EDT Updated: Aug 14, 2014, 10:18am EDT




 Justine Coyne
       Reporter- Pittsburgh Business Times
       Email | Twitter | LinkedIn | Google+

 Former Seegrid Corp. CEO Anthony Horbal has filed another suit against Giant Eagle Inc.,
 this time claiming the grocery giant was in breach of its fiduciary duties as an investor in the
 robotics firm.

 In the shareholder derivative suit, filed Friday, Horbal alleges Giant Eagle interfered with
 management in an effort to block outside investment as a way to seize control of the
 company. What differentiates this case from the previous filing is that a shareholder
 derivative suit is brought on behalf of a corporation against a third party, oftentimes with
 the third party being an insider of that corporation.

 Horbal and his investment group, HERC Management Services LLC, claim in the suit, filed in
 the Chancery Court of Delaware, that Giant Eagle stymied efforts to bring new funding into
 Seegrid and embarked on a scheme to appropriate the value of the company for itself. Giant
 Eagle owns more than 60 percent of Seegrid's outstanding shares.

 The parties listed in the suit include Giant Eagle Inc. and Giant Eagle of Delaware Inc., as
 well as Seegrid board members Daniel Shapira, general council with Giant Eagle Inc. and
 brother of Giant Eagle Executive Chairman David Shapira; Hans Morvac, chief scientist and
 founder of Seegrid; and Phillip Oliveri, vice president of finance and treasurer for Giant
 Eagle.

 Horbal, who maintains 20 percent of Seegrid's equity, resigned from the company's board of
 directors before the suit was filed, according to his attorney William Brewer, partner at
 Bickel & Brewer. The board voted to oust Horbal as CEO on July 14; however, he contends it
 did not have the authority to do so under the company's stockholder agreement.

 "In exchange for a loan, Giant Eagle laid out a plan that essentially would have given it a
 pathway to take all of the assets of the company," Brewer said.

                                                                                    Exhibit 4

http://www.bizjournals.com/pittsburgh/news/2014/08/13/second-suit-filed-in-legal-battle-be... 7/7/2015
                                                                                                   R217
Second suit filed in legal battle between ousted Seegrid CEO, Giant Eagle - Pittsburgh Bu... Page 2 of 2



 Seegrid has largely relied on month-to-month financing since January 2013, borrowing
 hundred of thousands — sometimes millions — of dollars most months to remain solvent,
 according to a Aug. 5 filling in the Allegheny County Court of Common Pleas. As CEO, Horbal
 brought a proposal to the company's directors to take in outside investment capital in order
 to bring Seegrid's intellectual property to profitability, but was blocked by members of the
 board that were appointed by Giant Eagle.

 What Giant Eagle proposed instead is it would invest $10 million into Seegrid that would
 transfer all of the company's intellectual property and assets to another company it
 controlled, according to Brewer. In addition, Giant Eagle stipulated that in order for it to
 make the loan, the other shareholders would have to release all claims against the company
 for any past conduct in interfering with management. Giant Eagle refused to install an
 independent board member to vote on the proposal, Brewer said.

 "What resulted instead was refusal from Giant Eagle to do anything but frankly offer
 minimum funding to reduce the independence of Seegrid and ensure complete dependence
 on them," Brewer said. "Other investors, not just Mr. Horbal, but those investors and those
 that provided the seed capital to fund the company, lost any real upside in this company
 that they had created."

 Horbal maintains that with Seegrid's intellectual property and partnerships with major
 manufacturers, it has the potential to become a billion-dollar company.

 "At this point no one will share in the benefit of any of these opportunities except Giant
 Eagle if it is able to move its plan forward," Brewer said.

 Following a civil suit filed by Horbal Aug. 5, Giant Eagle released the following statement
 through Rob Borella, its senior director of corporate communications: "As the majority
 shareholder in Seegrid Corporation, Giant Eagle continues to believe that Seegrid can be a
 successful company. Contrary to the allegations in the Complaint, Giant Eagle has always
 acted appropriately as a Seegrid shareholder. The Complaint was filed on behalf of a
 disgruntled former CEO, and it contains numerous material misstatements and is wholly
 without merit. Giant Eagle is confident this case will be dismissed."

 A spokesman for Giant Eagle said the company has no additional comment.

       Justine Coyne covers manufacturing and higher education.




http://www.bizjournals.com/pittsburgh/news/2014/08/13/second-suit-filed-in-legal-battle-be... 7/7/2015
                                                                                                   R218
EXHIBIT 5



            R219
                                                                                             . _.
                                                                              \.~ !   z_0    y uuui'i u
                                    CAUSE NO. DC-14-14169


EXCENTUS CORPORATION AND.                        §              IN THE DISTRICT COURT OF
CENTEGO II, LLC,                                 §
                                                 §
       Plaintiffs,                               §
                                                 §
v.                                               §                  DALLAS COUNTY, TEXAS
                                                 §
DICKSON PERRY,                                   §
                                                 §
       Defendant.                                §                 162nd JUDICIAL DISTRICT



      ORDER DEFENDANT'S APPLICATION FOR TEMPORARY INJUNCTION


       Before the Court is Defendant/Counter-Plaintiff Dickson Perry ("Perry" or "Defendant

Perry")'s Application for Temporary Injunction Against Plaintiff Excentus Corporation

("Excentus") and Centego II, LLC ("Centego II").          Having considered the application, the

arguments of the parties, and all evidence properly before it, the Court rules as follows:


       Defendant Dickson seeks an order from this Court requiring Plaintiffs to begin advancing

to Mr. Perry his reasonable expenses actually incurred in connection with claims brought by

MetroSplash Systems Group, Inc. ("MetroSplash") in Cause Number DC-14-07297, pending in

the 298th District Court, Dallas County ("MetroSplash Claims"), as well as all expenses and costs

incurred in connection with the above-captioned action.




                                                 1                                Exhibit 5


                                                                                                    R220
                                    Probable Right to the Relief.

         Defendant Perry seeks enforcement of his contractual rights to advancement of expenses

under Excentus' Bylaws and Articles of Incorporation, rights which he alleges Excentus has
                     1
wrongfully denied.       Defendant Perry has a probable right to relief

        As former CEO and Chairman of the Board of Excentus, Defendant Perry falls within the

categories of indemnified persons, and on October 17, 2014, his indemnification rights were

triggered. Three months prior, Centego II, LLC ("Centego II"), an affiliate of Excentus, had

initiated a lawsuit in the 29gth District Court, Dallas County, against MetroSplash Systems

Group, Inc. ("MetroSplash") and Steve Babick, its president. On October 17, 2014, MetroSplash

responded with counterclaims not just against Centego II but also against Excentus (one of

Centego II's shareholders), Brandon Logsdon (an officer and director of both Centego II and

Excentus), Jim Mills (an officer of both Centego II and Excentus), and Mr. Perry.

         In support of its claims, MetroSplash alleges that "[a]t all relevant times, Perry was the

Chairman and CEO of Excentus and an officer and director of Centego[IIJ," and it goes on to

complain about various actions taken by Mr. Perry in his capacity as a director and officer of

Excentus and/or Centego IL

       Defendant Perry retained the law finn of Lynn, Tillotson, Pinker & Cox, LLP ("LTPC").

On November 5, 2014 and again on December 3, 2014, LTPC, on behalf of Mr. Perry, demanded

from Excentus that Excentus advance to Mr. Perry his expenses actually incurred in defense of

the MetroSplash Claims. In response, Excentus forwarded to Mr. Perry a December 5 letter from

its insurance company, Chubb & Son ("Chubb"). In that letter, Chubb acknowledged receipt of

the pleadings associated with the MetroSplash Claims and stated that it would "provide a defense

for this matter," subject to the terms and conditions of its policy and its reservation of rights, as



                                                   2



                                                                                                        R221
stated in the letter. Four of the conditions of Chubb's representation are of particular relevance.

First, Mr. Perry must accept as his counsel Edward Perrin of the Hallet & Perrin law firm.

Second, Chubb prohibits      Mr. Perry from settling any claim with MetroSplash without prior

consent. Tltird, Mr. Perry must provide "all information, assistance and cooperation" that the

insurance company "reasonably requests." Andfourth, Mr. Perry must "agree [] to do nothing

that may prejudice the [the insurance company's] position or its potential or actual rights of

recovery."

          The Court concludes that nothing in the Bylaws and Articles of Incorporation permits

Excentus to condition advancement on acceptance of the terms of its insurance provider. The

Bylaws and Articles of Incorporation state Excentus must advance reasonable expenses actually

incurred.

                                        Irreparable Harm.

          Mr. Perry argues that there are two principal reasons why absent a temporary injunction,

Mr. Perry will suffer immediate and irreparable hann, and the Court agrees. First, advancement

of expenses is by its very nature an interim remedy, and therefore belated payment of such

expenses cannot compensate for their loss. Second, insurance counsel does not remedy this

harm. The claims and hostility between Excentus' current leadership and Mr. Perry, as well as

other related lawsuits involving Excentus and Mr. Perry, renders any representation by insurance

counsel, and not Mr. Perry' s chosen counsel, incomplete and ineffectual. Moreover, insurance

representation conditioned on Mr. Perry's cooperation is untenable and prejudicial to Mr. Perry's

rights.




                                                 3



                                                                                                  R222
         According to the terms of the Bylaws and the Articles of Incorporation, Mr. Perry is

entitled to advancement as per their terms, a conclusion that Excentus does not dispute. Those

terms cannot be reasonably read to allow Excentus to limit Mr. Perry's advancement rights as

Excentus would here. If Excentus denies Mr. Perry the advancement, then no damage award can

compensate for that loss because Mr. Perry's advancement will be effectively moot at a later

stage.

         Argument that Insurance counsel can remedy the harm to Mr. Perry is questionable in

light of his adversarial relationship with Excentus' present leadership and the unique situation

where there are various related lawsuits and potential for complete information.

         On November 19, 2014, Mr. Perry filed an arbitration demand against Excentus, alleging

that a cadre of Excentus shareholders had secretly conspired to wrongfully force Mr. Perry out of

Excentus and had caused Excentus to breach its contractual obligations with Mr. Perry

("Arbitration Claims"). Excentus counterclaimed, suing not only for breach of contract but also

for alleged breaches of Mr. Perry's fiduciary duties ("Arbitration Counterclaims"). Excentus

alleges, for example, that Mr. Perry "developed a plan, independent of Excentus' Board and

senior management, to gain more control of the Company ... Perry engaged Excentus' outside

counsel (paid for by Excentus) to provide legal work designed solely to benefit Perry as part of

his attempt to gain more control of the Company." Excentus Counterclaim,~ 11.

         Mr. Perry also retained LTPC to represent him in arbitration, and LTPC has in fact begun

litigating Mr. Perry's claims and defenses. The disputes are likely to overlap with argument

given that certain of Excentus' factual allegations - which Mr. Perry contests - may infect Mr.

Perry's defense against the MetroSplash Claims. For example, Excentus alleges that Mr. Perry

has "damaged relationships with participants, vendors, and shareholders," and that he was



                                                4




                                                                                                  R223
"unresponsive" and "disrupted the business." There exists, as a result, an imminent threat that at

the very least, factual determinations and legal positions in the Metrosplash Claims may bear on

the Arbitration Claims, and at worst, that Excentus may eventually reach a position adversarial to

Mr. Perry in the MetroSplash Claims.

                 The Equities Favor the Grant of an Temporary Injunction.

       The court must balance the equities before issuing an injunction, considering injury to (1)

the defendant and the public were the injunction granted and (2) the complainant were the

injunction denied.

       The damages to Excentus from the granting of the temporary injunction, if wrongfully

granted, can be estimated and compensated.       If this Court orders Excentus to advance Mr.

Perry's reasonable expenses actually incurred, the sole harm to Excentus would be the expenses

advanced - an obligation Excentus does not dispute. If, Mr. Perry is eventually proven to not be

entitled to such advancement, then he would have to pay that money back and Excentus would

be made whole.

       If however, Mr. Perry chooses to personally bear the expense of his legal representation,

he forever loses the right to advancement, a right that Excentus does not even dispute. Further,

Mr. Perry testified to the financial burden that such expenses would place on him, who, after

being terminated by Excentus, remains unemployed. Accordingly, the equities strongly favor

issuance of an injunction as requested by Mr. Perry.




                                                5



                                                                                                 R224
                                          CONCLUSION

       The Court hereby GRANTS the Application, and ORDERS as follows:

        1.     The Defendant shall submit his legal fees and expense bills related to his defense

in Centego II, LLC v. MetroSplash Systems Group, Inc., Cause No. DC-14-7297 (Dallas County,

Texas, 298th District Court) and in the above-referenced case to Excentus Corporation.

       2.      Excentus shall pay all fees and expenses incurred by the Defendant within fifteen

(15) days of receiving a bill. To the extent Excentus believes in good faith that any attorneys'

fees and expenses incurred by the Defendant are inappropriate, excessive, or unreasonable,

Excentus shall specify in writing the portion(s) of the bill it finds objectionable within thirty (30)

days of receiving a bill. Excentus must nonetheless advance any objected-to amounts within the

time frame ordered above.

       3.      The Court will retain jurisdiction to rule on any of Excentus' objections and on

the reasonableness of the expenses incurred by Defendant after a trial on the merits or other pre-

trial determination, such as summary judgment.

       4.      Any Party may motion the court to review the adequacy of the bond in this matter.

       This Order shall not be effective unless and until Defendant executes and files with the

clerk a bond, in conformity with the law, in the amount of Five Thousand Dollars ($5,000.00).

       IT IS SO ORDERED.

       SIGNED thisM-day of December, 20 14.


                                                                      PRESIDING JUDGE




                                                  6



                                                                                                     R225
Tab D
                                    CAUSE NO. DC-15-03853

DICKSON PERRY, derivatively on behalf  §             IN THE DISTRICT COURT
of EXCENTUS CORPORATION,               §
                                       §
      Plaintiff,                       §
                                       §
v.                                     §          OF DALLAS COUNTY, TEXAS
                                       §
BRANDON LOGSDON, JIM MILLS,            §
GIANT EAGLE, INC., DAVID SHAPIRA, §
DANIEL SHAPIRA, AUTO-GAS               §
SYSTEMS, INC., RANDY NICHOLSON, §
AND ALLIANCE DATA SYSTEMS, INC., §
and EXCENTUS CORPORATION.              §
                                       §
      Defendants.                      §             68TH JUDICIAL DISTRICT
______________________________________________________________________________

       PLAINTIFF DICKSON PERRY’S SUPPLEMENTAL BRIEF IN OPPOSITION
                    TO GIANT EAGLE’S MOTION TO DISMISS

______________________________________________________________________________

TO THE HONORABLE JUDGE:

         Plaintiff Dickson Perry (“Perry”) files this Supplemental Brief in Opposition to Giant

Eagle’s Motion to Dismiss for two reasons. First, Mr. Perry received new discovery responses

from Defendants which bear on the questions presented in Giant Eagle’s motion to dismiss.

Second, in its Reply, Giant Eagle mischaracterizes and ignores how Texas courts interpret forum-

selection clauses, and therefore Mr. Perry seeks to clarify Texas law on this point.

                                      I.      ARGUMENT

A.       Giant Eagle Mischaracterizes and Ignores Texas Law on Forum Selection Clauses.

         Texas courts construe the forum-selection clause asserted by Giant Eagle far more

narrowly than Giant Eagle posits, and in its Reply Giant Eagle wholly ignores this

well-established Texas precedent. Whether Giant Eagle believes that the SP Agreements will be

______________________________________________________________________________
PLAINTIFF’S SUPPLEMENTAL BRIEF IN OPPOSITION
TO GIANT EAGLE’S MOTION TO DISMISS                                                      Page 1
02708.403/4842-0322-0007


                                                                                            R226
relevant in defending against Mr. Perry’s claims is irrelevant.         First, nothing in the SP

Agreements will absolve two directors sitting on a corporate board while they also negotiate

against the corporation and pay themselves off, or Giant Eagle aiding and abetting those same

directors, or the Shapiras and Giant Eagle ousting Mr. Perry and looting the corporate coffers to

pay their co-conspirators off. Second, as explained below, Texas courts construe “arise out of”

language narrowly, and under such construction Giant Eagle pointing to the SP Agreements as a

purported defense against Mr. Perry’s claims do not bring Mr. Perry’s claims within the SP

Agreements’ forum selection clause.

         When a party seeks to enforce a forum-selection clause, the court must first interpret that

clause in accordance with Texas law to determine whether the claims fall within the clause’s

scope. Deep Water Slender Wells, Ltd. v. Shell Intern. Exploration & Prod., Inc., 234 S.W.3d

679, 688 (Tex. App.—Houston [14th Dist.] 2007, pet. denied). Clauses that contain “relate to” or

“are connected with” are construed broadly, while clauses containing “arising out of” – the

language the SP Agreements use here – are construed narrowly. See FD Frontier Drilling

(Cyprus), Ltd. v. Didmon, 438 S.W.3d 688, 695 (Tex. App.—Houston [1st Dist.] 2014), reh'g

overruled (July 29, 2014), review denied (Nov. 7, 2014) (distinguishing between narrow clauses

using “arise out of” and broader clauses using “arising out of or relating to,” which “embrace all

disputes between the parties having a significant relationship to the contract”); Glassell Producing

Co., Inc. v. Jared Res., Ltd., 422 S.W.3d 68, 77 (Tex. App.—Texarkana 2014, no pet.) (explaining

that “arising out of” is narrow and “most arbitration clauses contain language that is more broad,

such as ‘related to’ or ‘connected with’”); RSR Corp. v. Siegmund, 309 S.W.3d 686, 701 (Tex.

App.—Dallas 2010, no pet.) (noting use of “hereunder,” which the court equates to “arising

under,” is narrower than clauses containing “relating to”); In re Wilmer Cutler Pickering Hale &

______________________________________________________________________________
PLAINTIFF’S SUPPLEMENTAL BRIEF IN OPPOSITION
TO GIANT EAGLE’S MOTION TO DISMISS                                                          Page 2
02708.403/4842-0322-0007


                                                                                                R227
Dorr LLP, 05-08-01395-CV, 2008 WL 5413097, at *4 (Tex. App.—Dallas Dec. 31, 2008, no

pet.) (“[t]he phrase ‘relates to,’ in particular, is recognized as a very broad term”); Associated Air

Freight, Inc. v. Meek, 01-00-00843-CV, 2001 WL 225516, at *4 (Tex. App.—Houston [1st Dist.]

Mar. 8, 2001, no pet.) (a contract that omits broad terms, such as “relating to,” indicates that the

parties intended for a narrow scope); In re Conseco Fin. Servicing Corp., 19 S.W.3d 562, 570

(Tex. App.—Waco 2000, no pet.) (“arising from or relating to” is different than more limited and

narrow clauses).

         In contrast to the broader provisions the parties could have used in the SP Agreements,

“arise out of” means only “to originate or stem from or to result from.”              BLACK’S LAW

DICTIONARY 129 (10th ed. 2014). Mr. Perry’s claims do not originate, stem, or result from the SP

Agreements. They seek to enforce no rights in those agreements, and they make no reference to

any obligations of any party in those agreements. Mr. Perry can, and will, maintain his claims

independently of whatever the SP Agreements say. Where the language “arise out of” is used,

Texas courts bring within its scope only cases in which “but for” the agreement at issue, there

would be no claim.         See In re Lisa Laser USA, Inc., 310 S.W.3d 880, 886 (Tex. 2010)

(“HealthTronics’s claims arise out of the Agreement rather than other general obligations imposed

by law. That is, but for the Agreement, HealthTronics would have no basis to complain . . .”).

Here, Mr. Perry’s claims arise out of the general obligations imposed by Texas law – not any

obligations imposed by the SP Agreements.

         Judge Boyle decided to interpret SP Agreements’ forum selection clause more broadly,

but that holding made sense given Excentus’ particular claims in that case. As that Court

explained, “the Court must look to the Stock Purchase Agreements in order to resolve all of

Excentus’ claims.” Excentus Corp v. Giant Eagle, Inc., 3:11-cv-0331, 2012 WL 2525594, at *4

______________________________________________________________________________
PLAINTIFF’S SUPPLEMENTAL BRIEF IN OPPOSITION
TO GIANT EAGLE’S MOTION TO DISMISS                                                           Page 3
02708.403/4842-0322-0007


                                                                                                  R228
(N.D. Tex. July 2, 2012) (emphasis in original). That is simply not the case here. Further, Judge

Boyle was not bound by Texas Courts’ narrow interpretation of “arising out of” language.1

Instead, she looked to a single decision out of the Northern District of Illinois as support, in which

the Court stated that if the subject contract is “clearly a defense to a claim” – which there it was,

since the court was reviewing a fraudulent inducement claim in which the contract at issue

contained the representations at issue – then it may come within the scope of the forum-selection

clause. See Penn, L.L.C. v. New Edge Network, Inc., 03 C 5496, 2003 WL 22284207, at *2 (N.D.

Ill. Oct. 3, 2003) (emphasis added).

         This Court, on the other hand, must look to Texas precedent to interpret “arise out of” as

every Texas court has – narrowly. The SP Agreements are themselves the best evidence of how

narrow “arise out of” is. As is well established, if “parties use different language in different parts

of a contract, [courts] may ordinarily assume that they intended different things.” In re Wilmer

Cutler Pickering Hale & Dorr LLP, 05-08-01395-CV, 2008 WL 5413097, at *4 (Tex. App.—

Dallas Dec. 31, 2008, no pet.) (the court differentiated between the use of “arises out of or relates

to” and “instituted under” in the same contract, resulting in a broad scope for the former and a

narrow scope for the latter). In sections 7.01 and 7.02 of the SP Agreement, the parties chose the

wording “arise out of or in connection with” when identifying what claims Excentus would have

to identify. On the other hand, Section 8.06, which contains the forum-selection clause, brings
         1
             But see Pennzoil Exploration & Prod. Co. v. Ramco Energy, Ltd., 139 F.3d 1061, 1067 (5th Cir. 1998)
(noting that “courts distinguish ‘narrow arbitration clauses that only require arbitration of disputes ‘arising out of’ the
contract from broad arbitration clauses governing disputes that ‘relate to’ or ‘are connected with’ the contract”).
While Pennzoil involves arbitration clauses, it is common for courts to refer to arbitration case law in forum-selection
clause issues, and “the Supreme Court of the United States has stated that an arbitration agreement is a specialized
kind of forum-selection clause.” See Rodriguez de Quijas v. Shearson/American Exp., Inc., 490 U.S. 477, 482–83
(1989). See also In re AIU Ins. Co., 148 S.W.3d 109, 115 (Tex. 2004) (describing arbitration agreements “as another
type of forum-selection clause” and stating that there is no meaningful distinction between a non-arbitration forum-
selection clause and an arbitration clause); Deep Water Slender Wells, Ltd. v. Shell Intern. Exploration & Prod., Inc.,
234 S.W.3d 679, 693-94 (Tex. App.—Houston [14th Dist.] 2007, pet. denied) (the court refers to cases involving
arbitration clauses in order to reach its conclusion).

______________________________________________________________________________
PLAINTIFF’S SUPPLEMENTAL BRIEF IN OPPOSITION
TO GIANT EAGLE’S MOTION TO DISMISS                                                                               Page 4
02708.403/4842-0322-0007


                                                                                                                      R229
within its scope only “any action arising out of this agreement.” The change of wording between

the two clauses shows that the parties intended to apply two different standards to the scope of

each provision. Sections 7.01 and 7.02 both add “or in connection with” and thus have a much

broader scope. The forum-selection clause purposefully eliminates this language and specifically

only states “arising out of.” See Pinnacle Interior Elements, Ltd. v. Panalpina, Inc., No. CIV A

309-CV-0430-G, 2010 WL 445927, at *4 (N.D. Tex. Feb. 9, 2010) (“When the phrase ‘in

connection with’ appears in a contract, it functions to expand the scope of the clause that it

modifies to include anything that has a significant relationship to the subject matter of that

clause”).

         In short, other than Judge Boyle’s opinion (which relies on a Northern District of Illinois

case), Giant Eagle identifies no binding Texas authority requiring this Court to enforce a forum-

selection clause merely because Giant Eagle believes it may have some defense in the subject

contract to one of the many issues presented in this case.

B.       Defendants Make Clear They Will Not Litigate This Case in Pittsburgh.

         After filing Mr. Perry’s Response, Defendants served Mr. Perry with their responses to

various requests for admission propounded by Mr. Perry, attached hereto as Exhibits 1-3. Mr.

Perry sought to have Defendants either admit or deny whether they would consent to jurisdiction

and venue in Pittsburgh, should this Court dismiss this action. Defendants’ refused to even

answer the question, instead levying numerous objections to every single request for admission.

This evidences what Mr. Perry argues is the unjust and unreasonable result of enforcing the SP

Agreements’ forum-selection clause here: concurrent litigation addressing the same issues and

parties will result in multiple forums. If this Court dismisses Mr. Perry’s claims in this Court, Mr.

Perry will have to litigate in Pittsburgh, but the remaining Defendants will not consent to

______________________________________________________________________________
PLAINTIFF’S SUPPLEMENTAL BRIEF IN OPPOSITION
TO GIANT EAGLE’S MOTION TO DISMISS                                                           Page 5
02708.403/4842-0322-0007


                                                                                                 R230
litigating in Pittsburgh. The result will be highly wasteful, duplicative litigation with the potential

for inconsistent results. This is the very outcome that courts seek to avoid.



                                      II.     CONCLUSION.

         Giant Eagle’s asserted interpretation of the SP Agreements’ forum-selection clauses

stretches that language far beyond what Texas courts have held. Although Giant Eagle tries to

avoid this Court’s adjudication of Mr. Perry’s claims on the merits by asserting both collateral

estoppel and a forum-selection clause, Mr. Perry’s claims arise from a fundamentally different set

of facts than those in the prior, Excentus lawsuit. Further, under Texas law, the SP Agreements’

narrow forum-selection clause does not encompass Mr. Perry’s claims. The Court should deny

Giant Eagle’s motion to dismiss.




______________________________________________________________________________
PLAINTIFF’S SUPPLEMENTAL BRIEF IN OPPOSITION
TO GIANT EAGLE’S MOTION TO DISMISS                                                            Page 6
02708.403/4842-0322-0007


                                                                                                   R231
Date: August 24, 2015               Respectfully submitted,

                                    /s/Michael P. Lynn
                                    Michael P. Lynn, P.C. (mlynn@lynnllp.com)
                                    State Bar No. 12738500
                                    Andrés Correa (acorrea@lynnllp.com)
                                    State Bar No. 24076330
                                    Andrew S. Hansbrough (ahansbrough@lynnllp.com)
                                    State Bar No. 24094700
                                    LYNN TILLOTSON PINKER & COX, LLP
                                    2100 Ross Avenue, Suite 2700
                                    Dallas, Texas 75201
                                    214-981-3800 Telephone
                                    214-981-3839 Facsimile

                                    ATTORNEYS FOR PLAINTIFF
                                    DICKSON PERRY




______________________________________________________________________________
PLAINTIFF’S SUPPLEMENTAL BRIEF IN OPPOSITION
TO GIANT EAGLE’S MOTION TO DISMISS                                         Page 7
02708.403/4842-0322-0007


                                                                              R232
                               CERTIFICATE OF SERVICE

      The undersigned hereby certifies that a true and correct copy of the above and foregoing
document has been served as shown below on counsel of record on August 24, 2015:

Via Email                                         Via Email
Orrin L. Harrison III                             Lisa S. Gallerano
(oharrison@ghjhlaw.com)                           (lgallerano@akingump.com)
GRUBER HURST ELROD JOHANSEN HAIL                  Patrick O’Brien (pobrien@akingump.com)
SHANK, LLP                                        AKIN GUMP
1445 Ross Avenue, Suite 2500                      1700 Pacific Avenue, Suite 4100
Dallas, TX 75202                                  Dallas, TX 75201-4624
Attorneys for Defendants                          Attorneys for Defendant
Giant Eagle, Inc., David Shapira, and             Alliance Data Systems, Inc.
Daniel Shapira
                                                  Via Email
Via Email                                         Ken Carroll (kcarroll@ccsb.com)
Bernard Marcus (marcus@marcus-                    Byran Erman (berman@ccsb.com)
shapira.com)                                      Sara Romine (sromine@ccsb.com)
Scott Livingston (livingston@marcus-              CARRINGTON, COLEMAN, SLOMAN &
shapira.com)                                      BLUMENTHAL, L.L.P.
Jonathan Marcus (jmarcus@marcus-                  901 Main Street, Suite 5500
shapira.com)                                      Dallas, TX 75202-3767
MARCUS & SHAPIRA LLP                              Attorneys for Defendants
301 Grant Street, 35th Floor                      Brandon Logsdon and Jim Mills
One Oxford Centre
Pittsburgh, PA 15219-6401
Attorneys for Defendants
Giant Eagle, Inc., David Shapira, and
Daniel Shapira


Via Email
Robert B. Wagstaff (rwagstaff@mcmahonlawtx.com)
MCMAHON SUROVIK SUTTLE
P.O. Box 3679
Abilene, TX 79604
Attorney for Defendants
Randy Nicholson and Auto-Glass Systems, Inc.

                                           /s/ Andres Correa
                                           Andres Correa



4842-0322-0007, v. 1

______________________________________________________________________________
PLAINTIFF’S SUPPLEMENTAL BRIEF IN OPPOSITION
TO GIANT EAGLE’S MOTION TO DISMISS                                                    Page 8
02708.403/4842-0322-0007


                                                                                          R233
     EXHIBIT 1



Exhibits to Plaintiff Dickson Perry's Supplemental Brief   Page 1
in Opposition to Giant Eagle's Motion to Dismiss


                                                           R234
                                     CAUSE NO. DC-15-03853

DICKSON PERRY, derivatively on                     §             IN THE DISTRICT COURT
behalf of EXCENTUS CORPORATION,                    §
                                                   §
          Plaintiff,                               §
                                                   §
vs.                                                §
                                                   §             DALLAS COUNTY, TEXAS
EXCENTUS CORPORATION,                              §
BRANDON LOGSDON, JIM MILLS,                        §
GIANT EAGLE, INC., DAVID                           §
SHAPIRA, DANIEL SHAPIRA, AUTO-                     §
GAS SYSTEMS, INC., RANDY                           §
NICHOLSON, and                                     §
ALLIANCE DATA SYSTEMS, INC.,                       §
                                                   §
          Defendants,                              §             68TH JUDICIAL DISTRICT

                RESPONSES OF BRANDON LOGSDON AND JIM MILLS
                       TO PLAINTIFF’S FIRST REQUESTS
                 FOR ADMISSION DIRECTED AT THRESHOLD ISSUES

TO:       Plaintiff Dickson Perry, derivatively on behalf of Excentus Corporation, by and through
          his attorney of record, Andres Correa, Lynn Tillotson Pinker & Cox, LLP, 2100 Ross
          Avenue, Suite 2700, Dallas, Texas 75201.

          Pursuant to Texas Rule of Civil Procedure 198, Defendants Brandon Logsdon and Jim

Mills respond as follows to Plaintiff’s First Requests for Admission Directed to Threshold

Issues:

                       OBJECTIONS TO INSTRUCTIONS AND DEFINITIONS

          1.      Logsdon and Mills object to Instructions 1, 3, 4, 6, and 7 as inapplicable to the

Requests for Admission actually served by Plaintiff. Those Instructions reference “these

Interrogatories and . . . these Requests for Production,” rather than “Requests for Admission.”

Instruction No. 1 purports to require delivery of “an original sworn and executed response.” But

the Texas Rules of Civil Procedure do not require a “sworn” response to Requests for

Admission. Instruction No. 7 directs the delivery of “[a]ll responsive Electronically Stored


RESPONSES OF BRANDON LOGSDON AND JIM MILLS TO PLAINTIFF’S
FIRST REQUESTS FOR ADMISSION DIRECTED AT THRESHOLD ISSUES                                  PAGE 1


 Exhibits to Plaintiff Dickson Perry's Supplemental Brief                                    Page 2
 in Opposition to Giant Eagle's Motion to Dismiss
                                                                                                  R235
Information . . . so as to include all metadata.” But no Electronically Stored Information is

sought by the Requests.

       2.      Logsdon and Mills object to the Definitions set forth in Plaintiff’s Requests for

Admission that do not pertain to the Requests actually served. For example, Definitions 13, 15,

16, and 17 refer to entities or proceedings not addressed in the Requests, themselves. Definitions

18-27 refer to terms not found in any of the Requests. Logsdon and Mills object to those

definitions to the extent they may be intended to expand the Requests actually served.

       3.      Logsdon and Mills object to Definition 2, regarding the terms “You” and “Your.”

Because the Requests were served jointly upon five Defendants, the definition is vague and

ambiguous. It is unclear whether it is intended to apply to all of those five Defendants

collectively, or to each served Defendant individually.

             RESPONSES TO INDIVIDUAL REQUESTS FOR ADMISSION

Request for Admission No. 1: Admit that you would consent to the assertion of jurisdiction
over you if this Lawsuit were brought in a court in Pittsburgh, Pennsylvania.

       RESPONSE: Logsdon and Mills object to this Request on the following grounds:

       (a) The Request seeks disclosure of Defendants’ litigation strategy, which is protected
from disclosure by the work product doctrine, TEX. R. CIV. P. 192.5. See In re Culp, No. 09-10-
00308-CV, 2010 Tex. App. LEXIS 6702, *6-7 (Tex. App.―Beaumont July 16, 2010, orig.
proceeding); In re Bell Helicopter Textron, Inc., 87 S.W.3d 139, 150 (Tex. App.―Ft. Worth
2002, orig. proceeding).

         (b) The Request seeks information that is irrelevant and immaterial. The information
sought has no bearing whatsoever on the merits of this Lawsuit. Defendant Giant Eagle, Inc.
seeks to enforce a contractual forum-selection clause, as previously enforced by the decision of
another court. See generally Defendant Giant Eagle, Inc.’s Motion to Dismiss for Collateral
Estoppel or, in the Alternative, Pursuant to the Governing Forum Selection Clause. But it is
irrelevant and immaterial to the enforcement of that forum-selection clause, and the application
of the prior judgment enforcing that clause, (i) whether any party not a signatory to that forum-
selection clause is within or would consent to the jurisdiction of a court in Pittsburgh,
Pennsylvania, (ii) whether a court in Pittsburgh would be a proper or convenient venue or forum
with respect to such party, or (iii) whether enforcement of that clause might require Plaintiff to
litigate his claims in two forums. See In re Int’l Profit Assocs., Inc., 274 S.W.3d 672, 680 (Tex.
2009); In re FC Stone, LLC, 348 S.W.3d 548, 552 (Tex. App.―Dallas 2011, orig. proceeding).

RESPONSES OF BRANDON LOGSDON AND JIM MILLS TO PLAINTIFF’S
FIRST REQUESTS FOR ADMISSION DIRECTED AT THRESHOLD ISSUES                                 PAGE 2


 Exhibits to Plaintiff Dickson Perry's Supplemental Brief                                   Page 3
 in Opposition to Giant Eagle's Motion to Dismiss
                                                                                                 R236
        (c) The Request is premature. It addresses a circumstance that might arise in the future,
rather than facts or circumstances already in existence.

       (d) The Request is the mirror image of Request 2 and is therefore improper. See CEBI
Metal Sanayi Ve Ticaret A.S. v. Garcia, 108 S.W.3d 464, 466 (Tex. App.―Houston [14th Dist.]
2003, no pet.).

Request for Admission No. 2: Admit that you would not consent to the assertion of jurisdiction
over you if this Lawsuit were brought in a court in Pittsburgh, Pennsylvania.

       RESPONSE: Logsdon and Mills object to this Request on the following grounds:

       (a) The Request seeks disclosure of Defendants’ litigation strategy, which is protected
from disclosure by the work product doctrine, TEX. R. CIV. P. 192.5. See In re Culp, No. 09-10-
00308-CV, 2010 Tex. App. LEXIS 6702, *6-7 (Tex. App.―Beaumont July 16, 2010, orig.
proceeding); In re Bell Helicopter Textron, Inc., 87 S.W.3d 139, 150 (Tex. App.―Ft. Worth
2002, orig. proceeding).

         (b) The Request seeks information that is irrelevant and immaterial. The information
sought has no bearing whatsoever on the merits of this Lawsuit. Defendant Giant Eagle, Inc.
seeks to enforce a contractual forum-selection clause, as previously enforced by the decision of
another court. See generally Defendant Giant Eagle, Inc.’s Motion to Dismiss for Collateral
Estoppel or, in the Alternative, Pursuant to the Governing Forum Selection Clause. But it is
irrelevant and immaterial to the enforcement of that forum-selection clause, and the application
of the prior judgment enforcing that clause, (i) whether any party not a signatory to that forum-
selection clause is within or would consent to the jurisdiction of a court in Pittsburgh,
Pennsylvania, (ii) whether a court in Pittsburgh would be a proper or convenient venue or forum
with respect to such party, or (iii) whether enforcement of that clause might require Plaintiff to
litigate his claims in two forums. See In re Int’l Profit Assocs., Inc., 274 S.W.3d 672, 680 (Tex.
2009); In re FC Stone, LLC, 348 S.W.3d 548, 552 (Tex. App.―Dallas 2011, orig. proceeding).

        (c) The Request is premature. It addresses a circumstance that might arise in the future,
rather than facts or circumstances already in existence.

       (d) The Request is the mirror image of Request 1 and is therefore improper. See CEBI
Metal Sanayi Ve Ticaret A.S. v. Garcia, 108 S.W.3d 464, 466 (Tex. App.―Houston [14th Dist.]
2003, no pet.).

Request for Admission No. 3: Admit that you would oppose the assertion of jurisdiction over
you if this Lawsuit were brought in a court in Pittsburgh, Pennsylvania.

       RESPONSE: Logsdon and Mills object to this Request on the following grounds:

       (a) The Request seeks disclosure of Defendants’ litigation strategy, which is protected
from disclosure by the work product doctrine, TEX. R. CIV. P. 192.5. See In re Culp, No. 09-10-
00308-CV, 2010 Tex. App. LEXIS 6702, *6-7 (Tex. App.―Beaumont July 16, 2010, orig.


RESPONSES OF BRANDON LOGSDON AND JIM MILLS TO PLAINTIFF’S
FIRST REQUESTS FOR ADMISSION DIRECTED AT THRESHOLD ISSUES                                 PAGE 3


 Exhibits to Plaintiff Dickson Perry's Supplemental Brief                                   Page 4
 in Opposition to Giant Eagle's Motion to Dismiss
                                                                                                 R237
proceeding); In re Bell Helicopter Textron, Inc., 87 S.W.3d 139, 150 (Tex. App.―Ft. Worth
2002, orig. proceeding).

         (b) The Request seeks information that is irrelevant and immaterial. The information
sought has no bearing whatsoever on the merits of this Lawsuit. Defendant Giant Eagle, Inc.
seeks to enforce a contractual forum-selection clause, as previously enforced by the decision of
another court. See generally Defendant Giant Eagle, Inc.’s Motion to Dismiss for Collateral
Estoppel or, in the Alternative, Pursuant to the Governing Forum Selection Clause. But it is
irrelevant and immaterial to the enforcement of that forum-selection clause, and the application
of the prior judgment enforcing that clause, (i) whether any party not a signatory to that forum-
selection clause is within or would consent to the jurisdiction of a court in Pittsburgh,
Pennsylvania, (ii) whether a court in Pittsburgh would be a proper or convenient venue or forum
with respect to such party, or (iii) whether enforcement of that clause might require Plaintiff to
litigate his claims in two forums. See In re Int’l Profit Assocs., Inc., 274 S.W.3d 672, 680 (Tex.
2009); In re FC Stone, LLC, 348 S.W.3d 548, 552 (Tex. App.―Dallas 2011, orig. proceeding).

        (c) The Request is premature. It addresses a circumstance that might arise in the future,
rather than facts or circumstances already in existence.

       (d) The Request is the mirror image of Request 4 and is therefore improper. See CEBI
Metal Sanayi Ve Ticaret A.S. v. Garcia, 108 S.W.3d 464, 466 (Tex. App.―Houston [14th Dist.]
2003, no pet.).

Request for Admission No. 4: Admit that you would not oppose the assertion of jurisdiction
over you if this Lawsuit were brought in a court in Pittsburgh, Pennsylvania.

       RESPONSE: Logsdon and Mills object to this Request on the following grounds:

       (a) The Request seeks disclosure of Defendants’ litigation strategy, which is protected
from disclosure by the work product doctrine, TEX. R. CIV. P. 192.5. See In re Culp, No. 09-10-
00308-CV, 2010 Tex. App. LEXIS 6702, *6-7 (Tex. App.―Beaumont July 16, 2010, orig.
proceeding); In re Bell Helicopter Textron, Inc., 87 S.W.3d 139, 150 (Tex. App.―Ft. Worth
2002, orig. proceeding).

         (b) The Request seeks information that is irrelevant and immaterial. The information
sought has no bearing whatsoever on the merits of this Lawsuit. Defendant Giant Eagle, Inc.
seeks to enforce a contractual forum-selection clause, as previously enforced by the decision of
another court. See generally Defendant Giant Eagle, Inc.’s Motion to Dismiss for Collateral
Estoppel or, in the Alternative, Pursuant to the Governing Forum Selection Clause. But it is
irrelevant and immaterial to the enforcement of that forum-selection clause, and the application
of the prior judgment enforcing that clause, (i) whether any party not a signatory to that forum-
selection clause is within or would consent to the jurisdiction of a court in Pittsburgh,
Pennsylvania, (ii) whether a court in Pittsburgh would be a proper or convenient venue or forum
with respect to such party, or (iii) whether enforcement of that clause might require Plaintiff to
litigate his claims in two forums. See In re Int’l Profit Assocs., Inc., 274 S.W.3d 672, 680 (Tex.
2009); In re FC Stone, LLC, 348 S.W.3d 548, 552 (Tex. App.―Dallas 2011, orig. proceeding).


RESPONSES OF BRANDON LOGSDON AND JIM MILLS TO PLAINTIFF’S
FIRST REQUESTS FOR ADMISSION DIRECTED AT THRESHOLD ISSUES                                 PAGE 4


 Exhibits to Plaintiff Dickson Perry's Supplemental Brief                                   Page 5
 in Opposition to Giant Eagle's Motion to Dismiss
                                                                                                 R238
        (c) The Request is premature. It addresses a circumstance that might arise in the future,
rather than facts or circumstances already in existence.

       (d) The Request is the mirror image of Request 3 and is therefore improper. See CEBI
Metal Sanayi Ve Ticaret A.S. v. Garcia, 108 S.W.3d 464, 466 (Tex. App.―Houston [14th Dist.]
2003, no pet.).

Request for Admission No. 5: Admit that the courts of Pennsylvania would have jurisdiction
over you if this Lawsuit were brought in a court in Pittsburgh, Pennsylvania.

       RESPONSE: Logsdon and Mills object to this Request on the following grounds:

         (a) The Request seeks information that is irrelevant and immaterial. The information
sought has no bearing whatsoever on the merits of this Lawsuit. Defendant Giant Eagle, Inc.
seeks to enforce a contractual forum-selection clause, as previously enforced by the decision of
another court. See generally Defendant Giant Eagle, Inc.’s Motion to Dismiss for Collateral
Estoppel or, in the Alternative, Pursuant to the Governing Forum Selection Clause. But it is
irrelevant and immaterial to the enforcement of that forum-selection clause, and the application
of the prior judgment enforcing that clause, (i) whether any party not a signatory to that forum-
selection clause is within or would consent to the jurisdiction of a court in Pittsburgh,
Pennsylvania, (ii) whether a court in Pittsburgh would be a proper or convenient venue or forum
with respect to such party, or (iii) whether enforcement of that clause might require Plaintiff to
litigate his claims in two forums. See In re Int’l Profit Assocs., Inc., 274 S.W.3d 672, 680 (Tex.
2009); In re FC Stone, LLC, 348 S.W.3d 548, 552 (Tex. App.―Dallas 2011, orig. proceeding).

        (b) The Request is premature. It addresses a circumstance that might arise in the future,
rather than facts or circumstances already in existence.

       (c) The Request is the mirror image of Request 6 and is therefore improper. See CEBI
Metal Sanayi Ve Ticaret A.S. v. Garcia, 108 S.W.3d 464, 466 (Tex. App.―Houston [14th Dist.]
2003, no pet.).

Request for Admission No. 6: Admit that the courts of Pennsylvania would not have
jurisdiction over you if this Lawsuit were brought in a court in Pittsburgh, Pennsylvania.

       RESPONSE: Logsdon and Mills object to this Request on the following grounds:

        (a) The Request seeks information that is irrelevant and immaterial. The information
sought has no bearing whatsoever on the merits of this Lawsuit. Defendant Giant Eagle, Inc.
seeks to enforce a contractual forum-selection clause, as previously enforced by the decision of
another court. See generally Defendant Giant Eagle, Inc.’s Motion to Dismiss for Collateral
Estoppel or, in the Alternative, Pursuant to the Governing Forum Selection Clause. But it is
irrelevant and immaterial to the enforcement of that forum-selection clause, and the application
of the prior judgment enforcing that clause, (i) whether any party not a signatory to that forum-
selection clause is within or would consent to the jurisdiction of a court in Pittsburgh,
Pennsylvania, (ii) whether a court in Pittsburgh would be a proper or convenient venue or forum
with respect to such party, or (iii) whether enforcement of that clause might require Plaintiff to

RESPONSES OF BRANDON LOGSDON AND JIM MILLS TO PLAINTIFF’S
FIRST REQUESTS FOR ADMISSION DIRECTED AT THRESHOLD ISSUES                                 PAGE 5


 Exhibits to Plaintiff Dickson Perry's Supplemental Brief                                   Page 6
 in Opposition to Giant Eagle's Motion to Dismiss
                                                                                                 R239
litigate his claims in two forums. See In re Int’l Profit Assocs., Inc., 274 S.W.3d 672, 680 (Tex.
2009); In re FC Stone, LLC, 348 S.W.3d 548, 552 (Tex. App.―Dallas 2011, orig. proceeding).

        (b) The Request is premature. It addresses a circumstance that might arise in the future,
rather than facts or circumstances already in existence.

       (c) The Request is the mirror image of Request 5 and is therefore improper. See CEBI
Metal Sanayi Ve Ticaret A.S. v. Garcia, 108 S.W.3d 464, 466 (Tex. App.―Houston [14th Dist.]
2003, no pet.).

Request for Admission No. 7: Admit that you would oppose venue if this Lawsuit were brought
in a court in Pittsburgh, Pennsylvania.

       RESPONSE: Logsdon and Mills object to this Request on the following grounds:

       (a) The Request seeks disclosure of Defendants’ litigation strategy, which is protected
from disclosure by the work product doctrine, TEX. R. CIV. P. 192.5. See In re Culp, No. 09-10-
00308-CV, 2010 Tex. App. LEXIS 6702, *6-7 (Tex. App.―Beaumont July 16, 2010, orig.
proceeding); In re Bell Helicopter Textron, Inc., 87 S.W.3d 139, 150 (Tex. App.―Ft. Worth
2002, orig. proceeding).

         (b) The Request seeks information that is irrelevant and immaterial. The information
sought has no bearing whatsoever on the merits of this Lawsuit. Defendant Giant Eagle, Inc.
seeks to enforce a contractual forum-selection clause, as previously enforced by the decision of
another court. See generally Defendant Giant Eagle, Inc.’s Motion to Dismiss for Collateral
Estoppel or, in the Alternative, Pursuant to the Governing Forum Selection Clause. But it is
irrelevant and immaterial to the enforcement of that forum-selection clause, and the application
of the prior judgment enforcing that clause, (i) whether any party not a signatory to that forum-
selection clause is within or would consent to the jurisdiction of a court in Pittsburgh,
Pennsylvania, (ii) whether a court in Pittsburgh would be a proper or convenient venue or forum
with respect to such party, or (iii) whether enforcement of that clause might require Plaintiff to
litigate his claims in two forums. See In re Int’l Profit Assocs., Inc., 274 S.W.3d 672, 680 (Tex.
2009); In re FC Stone, LLC, 348 S.W.3d 548, 552 (Tex. App.―Dallas 2011, orig. proceeding).

        (c) The Request is premature. It addresses a circumstance that might arise in the future,
rather than facts or circumstances already in existence.

       (d) The Request improperly applies the term “venue” to a court in Pennsylvania. See In re
Brown, 441 S.W.3d 405, 408 (Tex. App.―Dallas 2013, orig. proceeding) (“[F]orum and venue
have distinct legal meanings. A forum-selection agreement is one that chooses another state or
sovereign as the location for trial, whereas a venue-selection agreement chooses a particular
county or court within that state or sovereign.”).

       (e) The Request is the mirror image of Request 8 and is therefore improper. See CEBI
Metal Sanayi Ve Ticaret A.S. v. Garcia, 108 S.W.3d 464, 466 (Tex. App.―Houston [14th Dist.]
2003, no pet.).


RESPONSES OF BRANDON LOGSDON AND JIM MILLS TO PLAINTIFF’S
FIRST REQUESTS FOR ADMISSION DIRECTED AT THRESHOLD ISSUES                                 PAGE 6


 Exhibits to Plaintiff Dickson Perry's Supplemental Brief                                   Page 7
 in Opposition to Giant Eagle's Motion to Dismiss
                                                                                                 R240
Request for Admission No. 8: Admit that you would not oppose venue if this Lawsuit were
brought in a court in Pittsburgh, Pennsylvania.

       RESPONSE: Logsdon and Mills object to this Request on the following grounds:

       (a) The Request seeks disclosure of Defendants’ litigation strategy, which is protected
from disclosure by the work product doctrine, TEX. R. CIV. P. 192.5. See In re Culp, No. 09-10-
00308-CV, 2010 Tex. App. LEXIS 6702, *6-7 (Tex. App.―Beaumont July 16, 2010, orig.
proceeding); In re Bell Helicopter Textron, Inc., 87 S.W.3d 139, 150 (Tex. App.―Ft. Worth
2002, orig. proceeding).

         (b) The Request seeks information that is irrelevant and immaterial. The information
sought has no bearing whatsoever on the merits of this Lawsuit. Defendant Giant Eagle, Inc.
seeks to enforce a contractual forum-selection clause, as previously enforced by the decision of
another court. See generally Defendant Giant Eagle, Inc.’s Motion to Dismiss for Collateral
Estoppel or, in the Alternative, Pursuant to the Governing Forum Selection Clause. But it is
irrelevant and immaterial to the enforcement of that forum-selection clause, and the application
of the prior judgment enforcing that clause, (i) whether any party not a signatory to that forum-
selection clause is within or would consent to the jurisdiction of a court in Pittsburgh,
Pennsylvania, (ii) whether a court in Pittsburgh would be a proper or convenient venue or forum
with respect to such party, or (iii) whether enforcement of that clause might require Plaintiff to
litigate his claims in two forums. See In re Int’l Profit Assocs., Inc., 274 S.W.3d 672, 680 (Tex.
2009); In re FC Stone, LLC, 348 S.W.3d 548, 552 (Tex. App.―Dallas 2011, orig. proceeding).

        (c) The Request is premature. It addresses a circumstance that might arise in the future,
rather than facts or circumstances already in existence.

       (d) The Request improperly applies the term “venue” to a court in Pennsylvania. See In re
Brown, 441 S.W.3d 405, 408 (Tex. App.―Dallas 2013, orig. proceeding) (“[F]orum and venue
have distinct legal meanings. A forum-selection agreement is one that chooses another state or
sovereign as the location for trial, whereas a venue-selection agreement chooses a particular
county or court within that state or sovereign.”).

       (e) The Request is the mirror image of Request 7 and is therefore improper. See CEBI
Metal Sanayi Ve Ticaret A.S. v. Garcia, 108 S.W.3d 464, 466 (Tex. App.―Houston [14th Dist.]
2003, no pet.).

Request for Admission No. 9: Admit that you would consent to venue if this Lawsuit were
brought in a court in Pittsburgh, Pennsylvania.

       RESPONSE: Logsdon and Mills object to this Request on the following grounds:

       (a) The Request seeks disclosure of Defendants’ litigation strategy, which is protected
from disclosure by the work product doctrine, TEX. R. CIV. P. 192.5. See In re Culp, No. 09-10-
00308-CV, 2010 Tex. App. LEXIS 6702, *6-7 (Tex. App.―Beaumont July 16, 2010, orig.
proceeding); In re Bell Helicopter Textron, Inc., 87 S.W.3d 139, 150 (Tex. App.―Ft. Worth
2002, orig. proceeding).

RESPONSES OF BRANDON LOGSDON AND JIM MILLS TO PLAINTIFF’S
FIRST REQUESTS FOR ADMISSION DIRECTED AT THRESHOLD ISSUES                                 PAGE 7


 Exhibits to Plaintiff Dickson Perry's Supplemental Brief                                   Page 8
 in Opposition to Giant Eagle's Motion to Dismiss
                                                                                                 R241
         (b) The Request seeks information that is irrelevant and immaterial. The information
sought has no bearing whatsoever on the merits of this Lawsuit. Defendant Giant Eagle, Inc.
seeks to enforce a contractual forum-selection clause, as previously enforced by the decision of
another court. See generally Defendant Giant Eagle, Inc.’s Motion to Dismiss for Collateral
Estoppel or, in the Alternative, Pursuant to the Governing Forum Selection Clause. But it is
irrelevant and immaterial to the enforcement of that forum-selection clause, and the application
of the prior judgment enforcing that clause, (i) whether any party not a signatory to that forum-
selection clause is within or would consent to the jurisdiction of a court in Pittsburgh,
Pennsylvania, (ii) whether a court in Pittsburgh would be a proper or convenient venue or forum
with respect to such party, or (iii) whether enforcement of that clause might require Plaintiff to
litigate his claims in two forums. See In re Int’l Profit Assocs., Inc., 274 S.W.3d 672, 680 (Tex.
2009); In re FC Stone, LLC, 348 S.W.3d 548, 552 (Tex. App.―Dallas 2011, orig. proceeding).

        (c) The Request is premature. It addresses a circumstance that might arise in the future,
rather than facts or circumstances already in existence.

       (d) The Request improperly applies the term “venue” to a court in Pennsylvania. See In re
Brown, 441 S.W.3d 405, 408 (Tex. App.―Dallas 2013, orig. proceeding) (“[F]orum and venue
have distinct legal meanings. A forum-selection agreement is one that chooses another state or
sovereign as the location for trial, whereas a venue-selection agreement chooses a particular
county or court within that state or sovereign.”).

       (e) The Request is the mirror image of Request 10 and is therefore improper. See CEBI
Metal Sanayi Ve Ticaret A.S. v. Garcia, 108 S.W.3d 464, 466 (Tex. App.―Houston [14th Dist.]
2003, no pet.).

Request for Admission No. 10: Admit that you would not consent to venue if this Lawsuit were
brought in a court in Pittsburgh, Pennsylvania.

       RESPONSE: Logsdon and Mills object to this Request on the following grounds:

       (a) The Request seeks disclosure of Defendants’ litigation strategy, which is protected
from disclosure by the work product doctrine, TEX. R. CIV. P. 192.5. See In re Culp, No. 09-10-
00308-CV, 2010 Tex. App. LEXIS 6702, *6-7 (Tex. App.―Beaumont July 16, 2010, orig.
proceeding); In re Bell Helicopter Textron, Inc., 87 S.W.3d 139, 150 (Tex. App.―Ft. Worth
2002, orig. proceeding).

        (b) The Request seeks information that is irrelevant and immaterial. The information
sought has no bearing whatsoever on the merits of this Lawsuit. Defendant Giant Eagle, Inc.
seeks to enforce a contractual forum-selection clause, as previously enforced by the decision of
another court. See generally Defendant Giant Eagle, Inc.’s Motion to Dismiss for Collateral
Estoppel or, in the Alternative, Pursuant to the Governing Forum Selection Clause. But it is
irrelevant and immaterial to the enforcement of that forum-selection clause, and the application
of the prior judgment enforcing that clause, (i) whether any party not a signatory to that forum-
selection clause is within or would consent to the jurisdiction of a court in Pittsburgh,
Pennsylvania, (ii) whether a court in Pittsburgh would be a proper or convenient venue or forum
with respect to such party, or (iii) whether enforcement of that clause might require Plaintiff to

RESPONSES OF BRANDON LOGSDON AND JIM MILLS TO PLAINTIFF’S
FIRST REQUESTS FOR ADMISSION DIRECTED AT THRESHOLD ISSUES                                 PAGE 8


 Exhibits to Plaintiff Dickson Perry's Supplemental Brief                                   Page 9
 in Opposition to Giant Eagle's Motion to Dismiss
                                                                                                 R242
litigate his claims in two forums. See In re Int’l Profit Assocs., Inc., 274 S.W.3d 672, 680 (Tex.
2009); In re FC Stone, LLC, 348 S.W.3d 548, 552 (Tex. App.―Dallas 2011, orig. proceeding).

        (c) The Request is premature. It addresses a circumstance that might arise in the future,
rather than facts or circumstances already in existence.

       (d) The Request improperly applies the term “venue” to a court in Pennsylvania. See In re
Brown, 441 S.W.3d 405, 408 (Tex. App.―Dallas 2013, orig. proceeding) (“[F]orum and venue
have distinct legal meanings. A forum-selection agreement is one that chooses another state or
sovereign as the location for trial, whereas a venue-selection agreement chooses a particular
county or court within that state or sovereign.”).

       (e) The Request is the mirror image of Request 9 and is therefore improper. See CEBI
Metal Sanayi Ve Ticaret A.S. v. Garcia, 108 S.W.3d 464, 466 (Tex. App.―Houston [14th Dist.]
2003, no pet.).

Request for Admission No. 11: Admit that venue would be proper if this Lawsuit were brought
in a court in Pittsburgh, Pennsylvania.

       RESPONSE: Logsdon and Mills object to this Request on the following grounds:

         (a) The Request seeks information that is irrelevant and immaterial. The information
sought has no bearing whatsoever on the merits of this Lawsuit. Defendant Giant Eagle, Inc.
seeks to enforce a contractual forum-selection clause, as previously enforced by the decision of
another court. See generally Defendant Giant Eagle, Inc.’s Motion to Dismiss for Collateral
Estoppel or, in the Alternative, Pursuant to the Governing Forum Selection Clause. But it is
irrelevant and immaterial to the enforcement of that forum-selection clause, and the application
of the prior judgment enforcing that clause, (i) whether any party not a signatory to that forum-
selection clause is within or would consent to the jurisdiction of a court in Pittsburgh,
Pennsylvania, (ii) whether a court in Pittsburgh would be a proper or convenient venue or forum
with respect to such party, or (iii) whether enforcement of that clause might require Plaintiff to
litigate his claims in two forums. See In re Int’l Profit Assocs., Inc., 274 S.W.3d 672, 680 (Tex.
2009); In re FC Stone, LLC, 348 S.W.3d 548, 552 (Tex. App.―Dallas 2011, orig. proceeding).

        (b) The Request is premature. It addresses a circumstance that might arise in the future,
rather than facts or circumstances already in existence.

       (c) The Request improperly applies the term “venue” to a court in Pennsylvania. See In re
Brown, 441 S.W.3d 405, 408 (Tex. App.―Dallas 2013, orig. proceeding) (“[F]orum and venue
have distinct legal meanings. A forum-selection agreement is one that chooses another state or
sovereign as the location for trial, whereas a venue-selection agreement chooses a particular
county or court within that state or sovereign.”).

       (d) The Request is the mirror image of Request 12 and is therefore improper. See CEBI
Metal Sanayi Ve Ticaret A.S. v. Garcia, 108 S.W.3d 464, 466 (Tex. App.―Houston [14th Dist.]
2003, no pet.).


RESPONSES OF BRANDON LOGSDON AND JIM MILLS TO PLAINTIFF’S
FIRST REQUESTS FOR ADMISSION DIRECTED AT THRESHOLD ISSUES                                 PAGE 9


 Exhibits to Plaintiff Dickson Perry's Supplemental Brief                                  Page 10
 in Opposition to Giant Eagle's Motion to Dismiss
                                                                                                 R243
Request for Admission No. 12: Admit that venue would not be proper if this Lawsuit were
brought in a court in Pittsburgh, Pennsylvania.

       RESPONSE: Logsdon and Mills object to this Response on the following grounds:

         (a) The Request seeks information that is irrelevant and immaterial. The information
sought has no bearing whatsoever on the merits of this Lawsuit. Defendant Giant Eagle, Inc.
seeks to enforce a contractual forum-selection clause, as previously enforced by the decision of
another court. See generally Defendant Giant Eagle, Inc.’s Motion to Dismiss for Collateral
Estoppel or, in the Alternative, Pursuant to the Governing Forum Selection Clause. But it is
irrelevant and immaterial to the enforcement of that forum-selection clause, and the application
of the prior judgment enforcing that clause, (i) whether any party not a signatory to that forum-
selection clause is within or would consent to the jurisdiction of a court in Pittsburgh,
Pennsylvania, (ii) whether a court in Pittsburgh would be a proper or convenient venue or forum
with respect to such party, or (iii) whether enforcement of that clause might require Plaintiff to
litigate his claims in two forums. See In re Int’l Profit Assocs., Inc., 274 S.W.3d 672, 680 (Tex.
2009); In re FC Stone, LLC, 348 S.W.3d 548, 552 (Tex. App.―Dallas 2011, orig. proceeding).

        (b) The Request is premature. It addresses a circumstance that might arise in the future,
rather than facts or circumstances already in existence.

       (c) The Request improperly applies the term “venue” to a court in Pennsylvania. See In re
Brown, 441 S.W.3d 405, 408 (Tex. App.―Dallas 2013, orig. proceeding) (“[F]orum and venue
have distinct legal meanings. A forum-selection agreement is one that chooses another state or
sovereign as the location for trial, whereas a venue-selection agreement chooses a particular
county or court within that state or sovereign.”).

       (d) The Request is the mirror image of Request 11 and is therefore improper. See CEBI
Metal Sanayi Ve Ticaret A.S. v. Garcia, 108 S.W.3d 464, 466 (Tex. App.―Houston [14th Dist.]
2003, no pet.).

Request for Admission No. 13: Admit that you would oppose the forum if this Lawsuit were
brought in a court in Pittsburgh, Pennsylvania.

       RESPONSE: Logsdon and Mills object to this Request on the following grounds:

       (a) The Request seeks disclosure of Defendants’ litigation strategy, which is protected
from disclosure by the work product doctrine, TEX. R. CIV. P. 192.5. See In re Culp, No. 09-10-
00308-CV, 2010 Tex. App. LEXIS 6702, *6-7 (Tex. App.―Beaumont July 16, 2010, orig.
proceeding); In re Bell Helicopter Textron, Inc., 87 S.W.3d 139, 150 (Tex. App.―Ft. Worth
2002, orig. proceeding).

       (b) The Request seeks information that is irrelevant and immaterial. The information
sought has no bearing whatsoever on the merits of this Lawsuit. Defendant Giant Eagle, Inc.
seeks to enforce a contractual forum-selection clause, as previously enforced by the decision of
another court. See generally Defendant Giant Eagle, Inc.’s Motion to Dismiss for Collateral
Estoppel or, in the Alternative, Pursuant to the Governing Forum Selection Clause. But it is

RESPONSES OF BRANDON LOGSDON AND JIM MILLS TO PLAINTIFF’S
FIRST REQUESTS FOR ADMISSION DIRECTED AT THRESHOLD ISSUES                                PAGE 10


 Exhibits to Plaintiff Dickson Perry's Supplemental Brief                                  Page 11
 in Opposition to Giant Eagle's Motion to Dismiss
                                                                                                 R244
irrelevant and immaterial to the enforcement of that forum-selection clause, and the application
of the prior judgment enforcing that clause, (i) whether any party not a signatory to that forum-
selection clause is within or would consent to the jurisdiction of a court in Pittsburgh,
Pennsylvania, (ii) whether a court in Pittsburgh would be a proper or convenient venue or forum
with respect to such party, or (iii) whether enforcement of that clause might require Plaintiff to
litigate his claims in two forums. See In re Int’l Profit Assocs., Inc., 274 S.W.3d 672, 680 (Tex.
2009); In re FC Stone, LLC, 348 S.W.3d 548, 552 (Tex. App.―Dallas 2011, orig. proceeding).

        (c) The Request is premature. It addresses a circumstance that might arise in the future,
rather than facts or circumstances already in existence.

       (d) The Request is the mirror image of Request 14 and is therefore improper. See CEBI
Metal Sanayi Ve Ticaret A.S. v. Garcia, 108 S.W.3d 464, 466 (Tex. App.―Houston [14th Dist.]
2003, no pet.).

Request for Admission No. 14: Admit that you would not oppose the forum if this Lawsuit
were brought in a court in Pittsburgh, Pennsylvania.

       RESPONSE: Logsdon and Mills object to this Request on the following grounds:

       (a) The Request seeks disclosure of Defendants’ litigation strategy, which is protected
from disclosure by the work product doctrine, TEX. R. CIV. P. 192.5. See In re Culp, No. 09-10-
00308-CV, 2010 Tex. App. LEXIS 6702, *6-7 (Tex. App.―Beaumont July 16, 2010, orig.
proceeding); In re Bell Helicopter Textron, Inc., 87 S.W.3d 139, 150 (Tex. App.―Ft. Worth
2002, orig. proceeding).

         (b) The Request seeks information that is irrelevant and immaterial. The information
sought has no bearing whatsoever on the merits of this Lawsuit. Defendant Giant Eagle, Inc.
seeks to enforce a contractual forum-selection clause, as previously enforced by the decision of
another court. See generally Defendant Giant Eagle, Inc.’s Motion to Dismiss for Collateral
Estoppel or, in the Alternative, Pursuant to the Governing Forum Selection Clause. But it is
irrelevant and immaterial to the enforcement of that forum-selection clause, and the application
of the prior judgment enforcing that clause, (i) whether any party not a signatory to that forum-
selection clause is within or would consent to the jurisdiction of a court in Pittsburgh,
Pennsylvania, (ii) whether a court in Pittsburgh would be a proper or convenient venue or forum
with respect to such party, or (iii) whether enforcement of that clause might require Plaintiff to
litigate his claims in two forums. See In re Int’l Profit Assocs., Inc., 274 S.W.3d 672, 680 (Tex.
2009); In re FC Stone, LLC, 348 S.W.3d 548, 552 (Tex. App.―Dallas 2011, orig. proceeding).

        (c) The Request is premature. It addresses a circumstance that might arise in the future,
rather than facts or circumstances already in existence.

       (d) The Request is the mirror image of Request 13 and is therefore improper. See CEBI
Metal Sanayi Ve Ticaret A.S. v. Garcia, 108 S.W.3d 464, 466 (Tex. App.―Houston [14th Dist.]
2003, no pet.).



RESPONSES OF BRANDON LOGSDON AND JIM MILLS TO PLAINTIFF’S
FIRST REQUESTS FOR ADMISSION DIRECTED AT THRESHOLD ISSUES                                PAGE 11


 Exhibits to Plaintiff Dickson Perry's Supplemental Brief                                  Page 12
 in Opposition to Giant Eagle's Motion to Dismiss
                                                                                                 R245
Request for Admission No. 15: Admit that you would consent to the forum if this Lawsuit were
brought in a court in Pittsburgh, Pennsylvania.

       RESPONSE: Logsdon and Mills object to this Request on the following grounds:

       (a) The Request seeks disclosure of Defendants’ litigation strategy, which is protected
from disclosure by the work product doctrine, TEX. R. CIV. P. 192.5. See In re Culp, No. 09-10-
00308-CV, 2010 Tex. App. LEXIS 6702, *6-7 (Tex. App.―Beaumont July 16, 2010, orig.
proceeding); In re Bell Helicopter Textron, Inc., 87 S.W.3d 139, 150 (Tex. App.―Ft. Worth
2002, orig. proceeding).

         (b) The Request seeks information that is irrelevant and immaterial. The information
sought has no bearing whatsoever on the merits of this Lawsuit. Defendant Giant Eagle, Inc.
seeks to enforce a contractual forum-selection clause, as previously enforced by the decision of
another court. See generally Defendant Giant Eagle, Inc.’s Motion to Dismiss for Collateral
Estoppel or, in the Alternative, Pursuant to the Governing Forum Selection Clause. But it is
irrelevant and immaterial to the enforcement of that forum-selection clause, and the application
of the prior judgment enforcing that clause, (i) whether any party not a signatory to that forum-
selection clause is within or would consent to the jurisdiction of a court in Pittsburgh,
Pennsylvania, (ii) whether a court in Pittsburgh would be a proper or convenient venue or forum
with respect to such party, or (iii) whether enforcement of that clause might require Plaintiff to
litigate his claims in two forums. See In re Int’l Profit Assocs., Inc., 274 S.W.3d 672, 680 (Tex.
2009); In re FC Stone, LLC, 348 S.W.3d 548, 552 (Tex. App.―Dallas 2011, orig. proceeding).

        (c) The Request is premature. It addresses a circumstance that might arise in the future,
rather than facts or circumstances already in existence.

       (d) The Request is the mirror image of Request 16 and is therefore improper. See CEBI
Metal Sanayi Ve Ticaret A.S. v. Garcia, 108 S.W.3d 464, 466 (Tex. App.―Houston [14th Dist.]
2003, no pet.).

Request for Admission No. 16: Admit that you would not consent to the forum if this Lawsuit
were brought in a court in Pittsburgh, Pennsylvania.

       RESPONSE: Logsdon and Mills object to this Request on the following grounds:

       (a) The Request seeks disclosure of Defendants’ litigation strategy, which is protected
from disclosure by the work product doctrine, TEX. R. CIV. P. 192.5. See In re Culp, No. 09-10-
00308-CV, 2010 Tex. App. LEXIS 6702, *6-7 (Tex. App.―Beaumont July 16, 2010, orig.
proceeding); In re Bell Helicopter Textron, Inc., 87 S.W.3d 139, 150 (Tex. App.―Ft. Worth
2002, orig. proceeding).

       (b) The Request seeks information that is irrelevant and immaterial. The information
sought has no bearing whatsoever on the merits of this Lawsuit. Defendant Giant Eagle, Inc.
seeks to enforce a contractual forum-selection clause, as previously enforced by the decision of
another court. See generally Defendant Giant Eagle, Inc.’s Motion to Dismiss for Collateral
Estoppel or, in the Alternative, Pursuant to the Governing Forum Selection Clause. But it is

RESPONSES OF BRANDON LOGSDON AND JIM MILLS TO PLAINTIFF’S
FIRST REQUESTS FOR ADMISSION DIRECTED AT THRESHOLD ISSUES                                PAGE 12


 Exhibits to Plaintiff Dickson Perry's Supplemental Brief                                  Page 13
 in Opposition to Giant Eagle's Motion to Dismiss
                                                                                                 R246
irrelevant and immaterial to the enforcement of that forum-selection clause, and the application
of the prior judgment enforcing that clause, (i) whether any party not a signatory to that forum-
selection clause is within or would consent to the jurisdiction of a court in Pittsburgh,
Pennsylvania, (ii) whether a court in Pittsburgh would be a proper or convenient venue or forum
with respect to such party, or (iii) whether enforcement of that clause might require Plaintiff to
litigate his claims in two forums. See In re Int’l Profit Assocs., Inc., 274 S.W.3d 672, 680 (Tex.
2009); In re FC Stone, LLC, 348 S.W.3d 548, 552 (Tex. App.―Dallas 2011, orig. proceeding).

        (c) The Request is premature. It addresses a circumstance that might arise in the future,
rather than facts or circumstances already in existence.

       (d) The Request is the mirror image of Request 15 and is therefore improper. See CEBI
Metal Sanayi Ve Ticaret A.S. v. Garcia, 108 S.W.3d 464, 466 (Tex. App.―Houston [14th Dist.]
2003, no pet.).

Request for Admission No. 17: Admit that that the forum would be proper if this Lawsuit were
brought in a court in Pittsburgh, Pennsylvania.

       RESPONSE: Logsdon and Mills object to this Request on the following grounds:

         (a) The Request seeks information that is irrelevant and immaterial. The information
sought has no bearing whatsoever on the merits of this Lawsuit. Defendant Giant Eagle, Inc.
seeks to enforce a contractual forum-selection clause, as previously enforced by the decision of
another court. See generally Defendant Giant Eagle, Inc.’s Motion to Dismiss for Collateral
Estoppel or, in the Alternative, Pursuant to the Governing Forum Selection Clause. But it is
irrelevant and immaterial to the enforcement of that forum-selection clause, and the application
of the prior judgment enforcing that clause, (i) whether any party not a signatory to that forum-
selection clause is within or would consent to the jurisdiction of a court in Pittsburgh,
Pennsylvania, (ii) whether a court in Pittsburgh would be a proper or convenient venue or forum
with respect to such party, or (iii) whether enforcement of that clause might require Plaintiff to
litigate his claims in two forums. See In re Int’l Profit Assocs., Inc., 274 S.W.3d 672, 680 (Tex.
2009); In re FC Stone, LLC, 348 S.W.3d 548, 552 (Tex. App.―Dallas 2011, orig. proceeding).

        (b) The Request is premature. It addresses a circumstance that might arise in the future,
rather than facts or circumstances already in existence.

       (c) The Request is the mirror image of Request 18 and is therefore improper. See CEBI
Metal Sanayi Ve Ticaret A.S. v. Garcia, 108 S.W.3d 464, 466 (Tex. App.―Houston [14th Dist.]
2003, no pet.).
Request for Admission No. 18: Admit that the forum would not be proper if this Lawsuit were
brought in a court in Pittsburgh, Pennsylvania.

       RESPONSE: Logsdon and Mills object to this Request on the following grounds:

       (a) The Request seeks information that is irrelevant and immaterial. The information
sought has no bearing whatsoever on the merits of this Lawsuit. Defendant Giant Eagle, Inc.
seeks to enforce a contractual forum-selection clause, as previously enforced by the decision of

RESPONSES OF BRANDON LOGSDON AND JIM MILLS TO PLAINTIFF’S
FIRST REQUESTS FOR ADMISSION DIRECTED AT THRESHOLD ISSUES                                PAGE 13


 Exhibits to Plaintiff Dickson Perry's Supplemental Brief                                  Page 14
 in Opposition to Giant Eagle's Motion to Dismiss
                                                                                                 R247
another court. See generally Defendant Giant Eagle, Inc.’s Motion to Dismiss for Collateral
Estoppel or, in the Alternative, Pursuant to the Governing Forum Selection Clause. But it is
irrelevant and immaterial to the enforcement of that forum-selection clause, and the application
of the prior judgment enforcing that clause, (i) whether any party not a signatory to that forum-
selection clause is within or would consent to the jurisdiction of a court in Pittsburgh,
Pennsylvania, (ii) whether a court in Pittsburgh would be a proper or convenient venue or forum
with respect to such party, or (iii) whether enforcement of that clause might require Plaintiff to
litigate his claims in two forums. See In re Int’l Profit Assocs., Inc., 274 S.W.3d 672, 680 (Tex.
2009); In re FC Stone, LLC, 348 S.W.3d 548, 552 (Tex. App.―Dallas 2011, orig. proceeding).

        (b) The Request is premature. It addresses a circumstance that might arise in the future,
rather than facts or circumstances already in existence.

       (c) The Request is the mirror image of Request 17 and is therefore improper. See CEBI
Metal Sanayi Ve Ticaret A.S. v. Garcia, 108 S.W.3d 464, 466 (Tex. App.―Houston [14th Dist.]
2003, no pet.).

Request for Admission No. 19: Admit that it would be inconvenient for you if this Lawsuit
were brought in a court in Pittsburgh, Pennsylvania.

       RESPONSE: Logsdon and Mills object to this Request on the following grounds:

         (a) The Request seeks information that is irrelevant and immaterial. The information
sought has no bearing whatsoever on the merits of this Lawsuit. Defendant Giant Eagle, Inc.
seeks to enforce a contractual forum-selection clause, as previously enforced by the decision of
another court. See generally Defendant Giant Eagle, Inc.’s Motion to Dismiss for Collateral
Estoppel or, in the Alternative, Pursuant to the Governing Forum Selection Clause. But it is
irrelevant and immaterial to the enforcement of that forum-selection clause, and the application
of the prior judgment enforcing that clause, (i) whether any party not a signatory to that forum-
selection clause is within or would consent to the jurisdiction of a court in Pittsburgh,
Pennsylvania, (ii) whether a court in Pittsburgh would be a proper or convenient venue or forum
with respect to such party, or (iii) whether enforcement of that clause might require Plaintiff to
litigate his claims in two forums. See In re Int’l Profit Assocs., Inc., 274 S.W.3d 672, 680 (Tex.
2009); In re FC Stone, LLC, 348 S.W.3d 548, 552 (Tex. App.―Dallas 2011, orig. proceeding).

        (b) The Request is premature. It addresses a circumstance that might arise in the future,
rather than facts or circumstances already in existence.




RESPONSES OF BRANDON LOGSDON AND JIM MILLS TO PLAINTIFF’S
FIRST REQUESTS FOR ADMISSION DIRECTED AT THRESHOLD ISSUES                                PAGE 14


 Exhibits to Plaintiff Dickson Perry's Supplemental Brief                                  Page 15
 in Opposition to Giant Eagle's Motion to Dismiss
                                                                                                 R248
                                      Respectfully submitted,


                                      /s/ Ken Carroll
                                      Ken Carroll
                                        Bar No. 03888500
                                        kcarroll@ccsb.com
                                      Bryan Erman
                                        Bar No. 24040870
                                        berman@ccsb.com
                                      Sara Romine
                                        Bar No. 24067488
                                        sromine@ccsb.com
                                      CARRINGTON, COLEMAN, SLOMAN &
                                      BLUMENTHAL, L.L.P.
                                      901 Main Street, Suite 5500
                                      Dallas, Texas 75202-3767
                                      Telephone: 214-855-3000
                                      Fax: 214-855-1333

                                      Attorneys for Defendants
                                      Brandon Logsdon and Jim Mills


                              CERTIFICATE OF SERVICE

       The undersigned certifies that a copy of the foregoing instrument was served upon the
attorneys of record in the above cause, in accordance with Rule 21a, Texas Rules of Civil
Procedure, on August 17, 2015.


                                          /s/ Ken Carroll




RESPONSES OF BRANDON LOGSDON AND JIM MILLS TO PLAINTIFF’S
FIRST REQUESTS FOR ADMISSION DIRECTED AT THRESHOLD ISSUES                           PAGE 15


 Exhibits to Plaintiff Dickson Perry's Supplemental Brief                            Page 16
 in Opposition to Giant Eagle's Motion to Dismiss
                                                                                           R249
     EXHIBIT 2



Exhibits to Plaintiff Dickson Perry's Supplemental Brief   Page 17
in Opposition to Giant Eagle's Motion to Dismiss


                                                           R250
                                    CAUSE NO. DC-15-03853

DICKSON PERRY, derivatively on                    §          IN THE DISTRICT COURT
behalf                                            §
of EXCENTUS CORPORATION,                          §
                                                  §
          Plaintiff,                              §
                                                  §
v.                                                §        OF DALLAS COUNTY, TEXAS
                                                  §
EXCENTUS CORPORATION,                             §
BRANDON LOGSDON, JIM MILLS,                       §
GIANT EAGLE, INC., DAVID                          §
SHAPIRA,                                          §
DANIEL SHAPIRA, AUTO-GAS                          §
SYSTEMS, INC., RANDY                              §
NICHOLSON,                                        §
AND ADS ALLIANCE DATA                             §
SYSTEMS, INC.,                                    §
                                                  §
          Defendants.                             §          68TH JUDICIAL DISTRICT




                 DEFENDANT ADS ALLIANCE DATA SYSTEMS, INC.’S
                  OBJECTIONS AND RESPONSES TO PLAINTIFF’S
         FIRST REQUESTS FOR ADMISSION DIRECTED AT THRESHOLD ISSUES


TO:       Plaintiff Dickson Perry, derivatively on behalf of Excentus Corporation, by and through
          his attorney of record, Andres Correa, Lynn Tillotson Pinker & Cox, LLP, 2100 Ross
          Avenue, Suite 2700, Dallas, Texas 75201.

          Pursuant to the Texas Rules of Civil Procedure, Defendant ADS Alliance Data Systems,

Inc. (“ADS”) hereby serves these Objections and Responses to Plaintiff’s First Requests for

Admission Directed at Threshold Issues (“Requests”).




DEFENDANT ADS ALLIANCE DATA SYSTEMS, INC.’S OBJECTIONS AND RESPONSES TO
PLAINTIFF’S FIRST REQUESTS FOR ADMISSION DIRECTED AT THRESHOLD ISSUES - Page 1


     Exhibits to Plaintiff Dickson Perry's Supplemental Brief                             Page 18
     in Opposition to Giant Eagle's Motion to Dismiss
                                                                                              R251
                                 PRELIMINARY OBJECTIONS

       1.      ADS objects to Instructions 1, 3, 4, 6, and 7 as inapplicable to the Requests for

Admission actually served by Plaintiff. Those Instructions reference “these Interrogatories and

... these Requests for Production,” rather than “Requests for Admission.” Instruction No. 1

purports to require delivery of “an original sworn and executed response.” But the Texas Rules

of Civil Procedure do not require a “sworn” response to Requests for Admission. Instruction No.

7 directs the delivery of “[a]ll responsive Electronically Stored Information ... so as to include all

metadata.” But no Electronically Stored Information is responsive to or sought by the Requests.

       2.      ADS objects to the Definitions set forth in Plaintiff’s Requests for Admission that

do not pertain to the Requests actually served. For example, Definitions 13, 15, 16, and 17 refer

to entities or proceedings not addressed in the Requests, themselves. Definitions 18-27 refer to

terms not found in any of the Requests. ADS objects to those definitions to the extent they may

be intended to expand the Requests actually served.

       3.      ADS objects to Definition 2, regarding the terms “You” and “Your.” Because the

Requests were served jointly upon five Defendants, the definition is vague and ambiguous. It is

unclear whether it is intended to apply to all of those five Defendants collectively, or to each

served Defendant individually.

  OBJECTIONS AND RESPONSES TO INDIVIDUAL REQUEST FOR ADMISSIONS

Request for Admissions No. 1:          Admit that you would consent to the assertion of
jurisdiction over you if this Lawsuit were brought in a court in Pittsburgh, Pennsylvania.

        RESPONSE: ADS incorporates its Preliminary Objections as if set forth herein. ADS
further objects to this Request as follows:

       (a) The Request seeks disclosure of Defendants’ litigation strategy, which is protected
from disclosure by the work product doctrine, TEX. R. CIV. P. 192.5. See In re Culp, No. 09-10-
00308-CV, 2010 Tex. App. LEXIS 6702, *6-7 (Tex. App.―Beaumont July 16, 2010, orig.
proceeding); In re Bell Helicopter Textron, Inc., 87 S.W.3d 139, 150 (Tex. App.―Ft. Worth
2002, orig. proceeding).

DEFENDANT ADS ALLIANCE DATA SYSTEMS, INC.’S OBJECTIONS AND RESPONSES TO
PLAINTIFF’S FIRST REQUESTS FOR ADMISSION DIRECTED AT THRESHOLD ISSUES - Page 2


 Exhibits to Plaintiff Dickson Perry's Supplemental Brief                                     Page 19
 in Opposition to Giant Eagle's Motion to Dismiss
                                                                                                   R252
        (b) The Request seeks information that is irrelevant, immaterial, and unlikely to lead to
the discovery of admissible evidence. The information sought has no bearing whatsoever on the
merits of this Lawsuit. Defendant Giant Eagle, Inc. seeks to enforce a contractual forum-
selection clause, as previously enforced by the decision of another court. See generally
Defendant Giant Eagle, Inc.’s Motion to Dismiss for Collateral Estoppel or, in the Alternative,
Pursuant to the Governing Forum Selection Clause. But it is irrelevant and immaterial to the
enforcement of that forum-selection clause, and the application of the prior judgment enforcing
that clause, (i) whether any party not a signatory to that forum-selection clause is within or
would consent to the jurisdiction of a court in Pittsburgh, Pennsylvania, (ii) whether a court in
Pittsburgh would be a proper or convenient venue or forum with respect to such party, or (iii)
whether enforcement of that clause might require Plaintiff to litigate his claims in two forums.
See In re Int’l Profit Assocs., Inc., 274 S.W.3d 672, 680 (Tex. 2009); In re FC Stone, LLC, 348
S.W.3d 548, 552 (Tex. App.―Dallas 2011, orig. proceeding).

         (c) The Request is premature. It addresses a circumstance that might arise in the future,
rather than facts or circumstances already in existence.

       (d) The Request is the mirror image of Request 2 and is therefore improper. See CEBI
Metal Sanayi Ve Ticaret A.S. v. Garcia, 108 S.W.3d 464, 466 (Tex. App.―Houston [14th Dist.]
2003, no pet.).

Request for Admissions No. 2:          Admit that you would not consent to the assertion of
jurisdiction over you if this Lawsuit were brought in a court in Pittsburgh, Pennsylvania.

RESPONSE:

        RESPONSE: ADS incorporates its Preliminary Objections as if set forth herein. ADS
further objects to this Request as follows:

       (a) The Request seeks disclosure of Defendants’ litigation strategy, which is protected
from disclosure by the work product doctrine, TEX. R. CIV. P. 192.5. See In re Culp, No. 09-10-
00308-CV, 2010 Tex. App. LEXIS 6702, *6-7 (Tex. App.―Beaumont July 16, 2010, orig.
proceeding); In re Bell Helicopter Textron, Inc., 87 S.W.3d 139, 150 (Tex. App.―Ft. Worth
2002, orig. proceeding).

        (b) The Request seeks information that is irrelevant, immaterial, and unlikely to lead to
the discovery of admissible evidence. The information sought has no bearing whatsoever on the
merits of this Lawsuit. Defendant Giant Eagle, Inc. seeks to enforce a contractual forum-
selection clause, as previously enforced by the decision of another court. See generally
Defendant Giant Eagle, Inc.’s Motion to Dismiss for Collateral Estoppel or, in the Alternative,
Pursuant to the Governing Forum Selection Clause. But it is irrelevant and immaterial to the
enforcement of that forum-selection clause, and the application of the prior judgment enforcing
that clause, (i) whether any party not a signatory to that forum-selection clause is within or
would consent to the jurisdiction of a court in Pittsburgh, Pennsylvania, (ii) whether a court in
Pittsburgh would be a proper or convenient venue or forum with respect to such party, or (iii)
whether enforcement of that clause might require Plaintiff to litigate his claims in two forums.

DEFENDANT ADS ALLIANCE DATA SYSTEMS, INC.’S OBJECTIONS AND RESPONSES TO
PLAINTIFF’S FIRST REQUESTS FOR ADMISSION DIRECTED AT THRESHOLD ISSUES - Page 3



  Exhibits to Plaintiff Dickson Perry's Supplemental Brief                                 Page 20
  in Opposition to Giant Eagle's Motion to Dismiss
                                                                                              R253
See In re Int’l Profit Assocs., Inc., 274 S.W.3d 672, 680 (Tex. 2009); In re FC Stone, LLC, 348
S.W.3d 548, 552 (Tex. App.―Dallas 2011, orig. proceeding).

        (c) The Request is premature. It addresses a circumstance that might arise in the future,
rather than facts or circumstances already in existence.

       (d) The Request is the mirror image of Request 1 and is therefore improper. See CEBI
Metal Sanayi Ve Ticaret A.S. v. Garcia, 108 S.W.3d 464, 466 (Tex. App.―Houston [14th Dist.]
2003, no pet.).

Request for Admissions No. 3:        Admit that you would oppose the assertion of jurisdiction
over you if this Lawsuit were brought in a court in Pittsburgh, Pennsylvania.

        RESPONSE: ADS incorporates its Preliminary Objections as if set forth herein. ADS
further objects to this Request as follows:

       (a) The Request seeks disclosure of Defendants’ litigation strategy, which is protected
from disclosure by the work product doctrine, TEX. R. CIV. P. 192.5. See In re Culp, No. 09-10-
00308-CV, 2010 Tex. App. LEXIS 6702, *6-7 (Tex. App.―Beaumont July 16, 2010, orig.
proceeding); In re Bell Helicopter Textron, Inc., 87 S.W.3d 139, 150 (Tex. App.―Ft. Worth
2002, orig. proceeding).

        (b) The Request seeks information that is irrelevant, immaterial, and unlikely to lead to
the discovery of admissible evidence. The information sought has no bearing whatsoever on the
merits of this Lawsuit. Defendant Giant Eagle, Inc. seeks to enforce a contractual forum-
selection clause, as previously enforced by the decision of another court. See generally
Defendant Giant Eagle, Inc.’s Motion to Dismiss for Collateral Estoppel or, in the Alternative,
Pursuant to the Governing Forum Selection Clause. But it is irrelevant and immaterial to the
enforcement of that forum-selection clause, and the application of the prior judgment enforcing
that clause, (i) whether any party not a signatory to that forum-selection clause is within or
would consent to the jurisdiction of a court in Pittsburgh, Pennsylvania, (ii) whether a court in
Pittsburgh would be a proper or convenient venue or forum with respect to such party, or (iii)
whether enforcement of that clause might require Plaintiff to litigate his claims in two forums.
See In re Int’l Profit Assocs., Inc., 274 S.W.3d 672, 680 (Tex. 2009); In re FC Stone, LLC, 348
S.W.3d 548, 552 (Tex. App.―Dallas 2011, orig. proceeding).

        (c) The Request is premature. It addresses a circumstance that might arise in the future,
rather than facts or circumstances already in existence.

       (d) The Request is the mirror image of Request 4 and is therefore improper. See CEBI
Metal Sanayi Ve Ticaret A.S. v. Garcia, 108 S.W.3d 464, 466 (Tex. App.―Houston [14th Dist.]
2003, no pet.).




DEFENDANT ADS ALLIANCE DATA SYSTEMS, INC.’S OBJECTIONS AND RESPONSES TO
PLAINTIFF’S FIRST REQUESTS FOR ADMISSION DIRECTED AT THRESHOLD ISSUES - Page 4


 Exhibits to Plaintiff Dickson Perry's Supplemental Brief                                 Page 21
 in Opposition to Giant Eagle's Motion to Dismiss
                                                                                              R254
Request for Admissions No. 4:          Admit that you would not oppose the assertion of
jurisdiction over you if this Lawsuit were brought in a court in Pittsburgh, Pennsylvania.

        RESPONSE: ADS incorporates its Preliminary Objections as if set forth herein. ADS
further objects to this Request as follows:

       (a) The Request seeks disclosure of Defendants’ litigation strategy, which is protected
from disclosure by the work product doctrine, TEX. R. CIV. P. 192.5. See In re Culp, No. 09-10-
00308-CV, 2010 Tex. App. LEXIS 6702, *6-7 (Tex. App.―Beaumont July 16, 2010, orig.
proceeding); In re Bell Helicopter Textron, Inc., 87 S.W.3d 139, 150 (Tex. App.―Ft. Worth
2002, orig. proceeding).

        (b) The Request seeks information that is irrelevant, immaterial, and unlikely to lead to
the discovery of admissible evidence. The information sought has no bearing whatsoever on the
merits of this Lawsuit. Defendant Giant Eagle, Inc. seeks to enforce a contractual forum-
selection clause, as previously enforced by the decision of another court. See generally
Defendant Giant Eagle, Inc.’s Motion to Dismiss for Collateral Estoppel or, in the Alternative,
Pursuant to the Governing Forum Selection Clause. But it is irrelevant and immaterial to the
enforcement of that forum-selection clause, and the application of the prior judgment enforcing
that clause, (i) whether any party not a signatory to that forum-selection clause is within or
would consent to the jurisdiction of a court in Pittsburgh, Pennsylvania, (ii) whether a court in
Pittsburgh would be a proper or convenient venue or forum with respect to such party, or (iii)
whether enforcement of that clause might require Plaintiff to litigate his claims in two forums.
See In re Int’l Profit Assocs., Inc., 274 S.W.3d 672, 680 (Tex. 2009); In re FC Stone, LLC, 348
S.W.3d 548, 552 (Tex. App.―Dallas 2011, orig. proceeding).

        (c) The Request is premature. It addresses a circumstance that might arise in the future,
rather than facts or circumstances already in existence.

       (d) The Request is the mirror image of Request 3 and is therefore improper. See CEBI
Metal Sanayi Ve Ticaret A.S. v. Garcia, 108 S.W.3d 464, 466 (Tex. App.―Houston [14th Dist.]
2003, no pet.).

Request for Admissions No. 5:          Admit that the courts of Pennsylvania would have
jurisdiction over you if this Lawsuit were brought in a court in Pittsburgh, Pennsylvania.

        RESPONSE: ADS incorporates its Preliminary Objections as if set forth herein. ADS
further objects to this Request as follows:

        (a) The Request seeks information that is irrelevant, immaterial, and unlikely to lead to
the discovery of admissible evidence. The information sought has no bearing whatsoever on the
merits of this Lawsuit. Defendant Giant Eagle, Inc. seeks to enforce a contractual forum-
selection clause, as previously enforced by the decision of another court. See generally
Defendant Giant Eagle, Inc.’s Motion to Dismiss for Collateral Estoppel or, in the Alternative,
Pursuant to the Governing Forum Selection Clause. But it is irrelevant and immaterial to the
enforcement of that forum-selection clause, and the application of the prior judgment enforcing
that clause, (i) whether any party not a signatory to that forum-selection clause is within or
would consent to the jurisdiction of a court in Pittsburgh, Pennsylvania, (ii) whether a court in

DEFENDANT ADS ALLIANCE DATA SYSTEMS, INC.’S OBJECTIONS AND RESPONSES TO
PLAINTIFF’S FIRST REQUESTS FOR ADMISSION DIRECTED AT THRESHOLD ISSUES - Page 5


 Exhibits to Plaintiff Dickson Perry's Supplemental Brief                                  Page 22
 in Opposition to Giant Eagle's Motion to Dismiss
                                                                                                R255
Pittsburgh would be a proper or convenient venue or forum with respect to such party, or (iii)
whether enforcement of that clause might require Plaintiff to litigate his claims in two forums.
See In re Int’l Profit Assocs., Inc., 274 S.W.3d 672, 680 (Tex. 2009); In re FC Stone, LLC, 348
S.W.3d 548, 552 (Tex. App.―Dallas 2011, orig. proceeding).

        (b) The Request is premature. It addresses a circumstance that might arise in the future,
rather than facts or circumstances already in existence.

       (c) The Request is the mirror image of Request 6 and is therefore improper. See CEBI
Metal Sanayi Ve Ticaret A.S. v. Garcia, 108 S.W.3d 464, 466 (Tex. App.―Houston [14th Dist.]
2003, no pet.).

        (d) The Request seeks the admission of a legal conclusion that is dependent on the
circumstances of the case, which is not only premature but improper, and ADS cannot admit or
deny a legal conclusion as to whether a Pittsburgh, Pennsylvania court would have jurisdiction
over it under the current circumstances.

Request for Admissions No. 6:          Admit that the courts of Pennsylvania would not have
jurisdiction over you if this Lawsuit were brought in a court in Pittsburgh, Pennsylvania.

        RESPONSE: ADS incorporates its Preliminary Objections as if set forth herein. ADS
further objects to this Request as follows:

        (a) The Request seeks information that is irrelevant, immaterial, and unlikely to lead to
the discovery of admissible evidence. The information sought has no bearing whatsoever on the
merits of this Lawsuit. Defendant Giant Eagle, Inc. seeks to enforce a contractual forum-
selection clause, as previously enforced by the decision of another court. See generally
Defendant Giant Eagle, Inc.’s Motion to Dismiss for Collateral Estoppel or, in the Alternative,
Pursuant to the Governing Forum Selection Clause. But it is irrelevant and immaterial to the
enforcement of that forum-selection clause, and the application of the prior judgment enforcing
that clause, (i) whether any party not a signatory to that forum-selection clause is within or
would consent to the jurisdiction of a court in Pittsburgh, Pennsylvania, (ii) whether a court in
Pittsburgh would be a proper or convenient venue or forum with respect to such party, or (iii)
whether enforcement of that clause might require Plaintiff to litigate his claims in two forums.
See In re Int’l Profit Assocs., Inc., 274 S.W.3d 672, 680 (Tex. 2009); In re FC Stone, LLC, 348
S.W.3d 548, 552 (Tex. App.―Dallas 2011, orig. proceeding).

        (b) The Request is premature. It addresses a circumstance that might arise in the future,
rather than facts or circumstances already in existence.

       (c) The Request is the mirror image of Request 5 and is therefore improper. See CEBI
Metal Sanayi Ve Ticaret A.S. v. Garcia, 108 S.W.3d 464, 466 (Tex. App.―Houston [14th Dist.]
2003, no pet.).

        (d) The Request seeks the admission of a legal conclusion that is dependent on the
circumstances of the case, which is not only premature but improper, and ADS cannot admit or
deny a legal conclusion as to whether a Pittsburgh, Pennsylvania court would have jurisdiction
over it under the current circumstances.

DEFENDANT ADS ALLIANCE DATA SYSTEMS, INC.’S OBJECTIONS AND RESPONSES TO
PLAINTIFF’S FIRST REQUESTS FOR ADMISSION DIRECTED AT THRESHOLD ISSUES - Page 6


 Exhibits to Plaintiff Dickson Perry's Supplemental Brief                                   Page 23
 in Opposition to Giant Eagle's Motion to Dismiss
                                                                                                    R256
Request for Admissions No. 7:         Admit that you would oppose venue if this Lawsuit were
brought in a court in Pittsburgh, Pennsylvania.

        RESPONSE: ADS incorporates its Preliminary Objections as if set forth herein. ADS
further objects to this Request as follows:

       (a) The Request seeks disclosure of Defendants’ litigation strategy, which is protected
from disclosure by the work product doctrine, TEX. R. CIV. P. 192.5. See In re Culp, No. 09-10-
00308-CV, 2010 Tex. App. LEXIS 6702, *6-7 (Tex. App.―Beaumont July 16, 2010, orig.
proceeding); In re Bell Helicopter Textron, Inc., 87 S.W.3d 139, 150 (Tex. App.―Ft. Worth
2002, orig. proceeding).

        (b) The Request seeks information that is irrelevant, immaterial, and unlikely to lead to
the discovery of admissible evidence. The information sought has no bearing whatsoever on the
merits of this Lawsuit. Defendant Giant Eagle, Inc. seeks to enforce a contractual forum-
selection clause, as previously enforced by the decision of another court. See generally
Defendant Giant Eagle, Inc.’s Motion to Dismiss for Collateral Estoppel or, in the Alternative,
Pursuant to the Governing Forum Selection Clause. But it is irrelevant and immaterial to the
enforcement of that forum-selection clause, and the application of the prior judgment enforcing
that clause, (i) whether any party not a signatory to that forum-selection clause is within or
would consent to the jurisdiction of a court in Pittsburgh, Pennsylvania, (ii) whether a court in
Pittsburgh would be a proper or convenient venue or forum with respect to such party, or (iii)
whether enforcement of that clause might require Plaintiff to litigate his claims in two forums.
See In re Int’l Profit Assocs., Inc., 274 S.W.3d 672, 680 (Tex. 2009); In re FC Stone, LLC, 348
S.W.3d 548, 552 (Tex. App.―Dallas 2011, orig. proceeding).

        (c) The Request is premature. It addresses a circumstance that might arise in the future,
rather than facts or circumstances already in existence.

       (d) The Request improperly applies the term “venue” to a court in Pennsylvania. See In re
Brown, 441 S.W.3d 405, 408 (Tex. App.―Dallas 2013, orig. proceeding) (“[F]orum and venue
have distinct legal meanings. A forum-selection agreement is one that chooses another state or
sovereign as the location for trial, whereas a venue-selection agreement chooses a particular
county or court within that state or sovereign.”).

       (e) The Request is the mirror image of Request 8 and is therefore improper. See CEBI
Metal Sanayi Ve Ticaret A.S. v. Garcia, 108 S.W.3d 464, 466 (Tex. App.―Houston [14th Dist.]
2003, no pet.).

Request for Admissions No. 8:         Admit that you would not oppose venue if this Lawsuit
were brought in a court in Pittsburgh, Pennsylvania

        RESPONSE: ADS incorporates its Preliminary Objections as if set forth herein. ADS
further objects to this Request as follows:

       (a) The Request seeks disclosure of Defendants’ litigation strategy, which is protected
from disclosure by the work product doctrine, TEX. R. CIV. P. 192.5. See In re Culp, No. 09-10-
00308-CV, 2010 Tex. App. LEXIS 6702, *6-7 (Tex. App.―Beaumont July 16, 2010, orig.

DEFENDANT ADS ALLIANCE DATA SYSTEMS, INC.’S OBJECTIONS AND RESPONSES TO
PLAINTIFF’S FIRST REQUESTS FOR ADMISSION DIRECTED AT THRESHOLD ISSUES - Page 7


 Exhibits to Plaintiff Dickson Perry's Supplemental Brief                                 Page 24
 in Opposition to Giant Eagle's Motion to Dismiss
                                                                                              R257
proceeding); In re Bell Helicopter Textron, Inc., 87 S.W.3d 139, 150 (Tex. App.―Ft. Worth
2002, orig. proceeding).

        (b) The Request seeks information that is irrelevant, immaterial, and unlikely to lead to
the discovery of admissible evidence. The information sought has no bearing whatsoever on the
merits of this Lawsuit. Defendant Giant Eagle, Inc. seeks to enforce a contractual forum-
selection clause, as previously enforced by the decision of another court. See generally
Defendant Giant Eagle, Inc.’s Motion to Dismiss for Collateral Estoppel or, in the Alternative,
Pursuant to the Governing Forum Selection Clause. But it is irrelevant and immaterial to the
enforcement of that forum-selection clause, and the application of the prior judgment enforcing
that clause, (i) whether any party not a signatory to that forum-selection clause is within or
would consent to the jurisdiction of a court in Pittsburgh, Pennsylvania, (ii) whether a court in
Pittsburgh would be a proper or convenient venue or forum with respect to such party, or (iii)
whether enforcement of that clause might require Plaintiff to litigate his claims in two forums.
See In re Int’l Profit Assocs., Inc., 274 S.W.3d 672, 680 (Tex. 2009); In re FC Stone, LLC, 348
S.W.3d 548, 552 (Tex. App.―Dallas 2011, orig. proceeding).

        (c) The Request is premature. It addresses a circumstance that might arise in the future,
rather than facts or circumstances already in existence.

       (d) The Request improperly applies the term “venue” to a court in Pennsylvania. See In re
Brown, 441 S.W.3d 405, 408 (Tex. App.―Dallas 2013, orig. proceeding) (“[F]orum and venue
have distinct legal meanings. A forum-selection agreement is one that chooses another state or
sovereign as the location for trial, whereas a venue-selection agreement chooses a particular
county or court within that state or sovereign.”).

       (e) The Request is the mirror image of Request 7 and is therefore improper. See CEBI
Metal Sanayi Ve Ticaret A.S. v. Garcia, 108 S.W.3d 464, 466 (Tex. App.―Houston [14th Dist.]
2003, no pet.).

Request for Admissions No. 9:         Admit that you would consent to venue if this Lawsuit were
brought in a court in Pittsburgh, Pennsylvania.

        RESPONSE: ADS incorporates its Preliminary Objections as if set forth herein. ADS
further objects to this Request as follows:

       (a) The Request seeks disclosure of Defendants’ litigation strategy, which is protected
from disclosure by the work product doctrine, TEX. R. CIV. P. 192.5. See In re Culp, No. 09-10-
00308-CV, 2010 Tex. App. LEXIS 6702, *6-7 (Tex. App.―Beaumont July 16, 2010, orig.
proceeding); In re Bell Helicopter Textron, Inc., 87 S.W.3d 139, 150 (Tex. App.―Ft. Worth
2002, orig. proceeding).

        (b) The Request seeks information that is irrelevant, immaterial, and unlikely to lead to
the discovery of admissible evidence. The information sought has no bearing whatsoever on the
merits of this Lawsuit. Defendant Giant Eagle, Inc. seeks to enforce a contractual forum-
selection clause, as previously enforced by the decision of another court. See generally
Defendant Giant Eagle, Inc.’s Motion to Dismiss for Collateral Estoppel or, in the Alternative,
Pursuant to the Governing Forum Selection Clause. But it is irrelevant and immaterial to the

DEFENDANT ADS ALLIANCE DATA SYSTEMS, INC.’S OBJECTIONS AND RESPONSES TO
PLAINTIFF’S FIRST REQUESTS FOR ADMISSION DIRECTED AT THRESHOLD ISSUES - Page 8


 Exhibits to Plaintiff Dickson Perry's Supplemental Brief                                   Page 25
 in Opposition to Giant Eagle's Motion to Dismiss
                                                                                                    R258
enforcement of that forum-selection clause, and the application of the prior judgment enforcing
that clause, (i) whether any party not a signatory to that forum-selection clause is within or
would consent to the jurisdiction of a court in Pittsburgh, Pennsylvania, (ii) whether a court in
Pittsburgh would be a proper or convenient venue or forum with respect to such party, or (iii)
whether enforcement of that clause might require Plaintiff to litigate his claims in two forums.
See In re Int’l Profit Assocs., Inc., 274 S.W.3d 672, 680 (Tex. 2009); In re FC Stone, LLC, 348
S.W.3d 548, 552 (Tex. App.―Dallas 2011, orig. proceeding).

        (c) The Request is premature. It addresses a circumstance that might arise in the future,
rather than facts or circumstances already in existence.

       (d) The Request improperly applies the term “venue” to a court in Pennsylvania. See In re
Brown, 441 S.W.3d 405, 408 (Tex. App.―Dallas 2013, orig. proceeding) (“[F]orum and venue
have distinct legal meanings. A forum-selection agreement is one that chooses another state or
sovereign as the location for trial, whereas a venue-selection agreement chooses a particular
county or court within that state or sovereign.”).

       (e) The Request is the mirror image of Request 10 and is therefore improper. See CEBI
Metal Sanayi Ve Ticaret A.S. v. Garcia, 108 S.W.3d 464, 466 (Tex. App.―Houston [14th Dist.]
2003, no pet.)

Request for Admissions No. 10:        Admit that you would not consent to venue if this Lawsuit
were brought in a court in Pittsburgh, Pennsylvania.

        RESPONSE: ADS incorporates its Preliminary Objections as if set forth herein. ADS
further objects to this Request as follows:

       (a) The Request seeks disclosure of Defendants’ litigation strategy, which is protected
from disclosure by the work product doctrine, TEX. R. CIV. P. 192.5. See In re Culp, No. 09-10-
00308-CV, 2010 Tex. App. LEXIS 6702, *6-7 (Tex. App.―Beaumont July 16, 2010, orig.
proceeding); In re Bell Helicopter Textron, Inc., 87 S.W.3d 139, 150 (Tex. App.―Ft. Worth
2002, orig. proceeding).

        (b) The Request seeks information that is irrelevant, immaterial, and unlikely to lead to
the discovery of admissible evidence. The information sought has no bearing whatsoever on the
merits of this Lawsuit. Defendant Giant Eagle, Inc. seeks to enforce a contractual forum-
selection clause, as previously enforced by the decision of another court. See generally
Defendant Giant Eagle, Inc.’s Motion to Dismiss for Collateral Estoppel or, in the Alternative,
Pursuant to the Governing Forum Selection Clause. But it is irrelevant and immaterial to the
enforcement of that forum-selection clause, and the application of the prior judgment enforcing
that clause, (i) whether any party not a signatory to that forum-selection clause is within or
would consent to the jurisdiction of a court in Pittsburgh, Pennsylvania, (ii) whether a court in
Pittsburgh would be a proper or convenient venue or forum with respect to such party, or (iii)
whether enforcement of that clause might require Plaintiff to litigate his claims in two forums.
See In re Int’l Profit Assocs., Inc., 274 S.W.3d 672, 680 (Tex. 2009); In re FC Stone, LLC, 348
S.W.3d 548, 552 (Tex. App.―Dallas 2011, orig. proceeding).



DEFENDANT ADS ALLIANCE DATA SYSTEMS, INC.’S OBJECTIONS AND RESPONSES TO
PLAINTIFF’S FIRST REQUESTS FOR ADMISSION DIRECTED AT THRESHOLD ISSUES - Page 9


 Exhibits to Plaintiff Dickson Perry's Supplemental Brief                                   Page 26
 in Opposition to Giant Eagle's Motion to Dismiss
                                                                                                    R259
        (c) The Request is premature. It addresses a circumstance that might arise in the future,
rather than facts or circumstances already in existence.

       (d) The Request improperly applies the term “venue” to a court in Pennsylvania. See In re
Brown, 441 S.W.3d 405, 408 (Tex. App.―Dallas 2013, orig. proceeding) (“[F]orum and venue
have distinct legal meanings. A forum-selection agreement is one that chooses another state or
sovereign as the location for trial, whereas a venue-selection agreement chooses a particular
county or court within that state or sovereign.”).

       (e) The Request is the mirror image of Request 9 and is therefore improper. See CEBI
Metal Sanayi Ve Ticaret A.S. v. Garcia, 108 S.W.3d 464, 466 (Tex. App.―Houston [14th Dist.]
2003, no pet.).

Request for Admissions No. 11:        Admit that venue would be proper if this Lawsuit were
brought in a court in Pittsburgh, Pennsylvania.

        RESPONSE: ADS incorporates its Preliminary Objections as if set forth herein. ADS
further objects to this Request as follows:

        (a) The Request seeks information that is irrelevant, immaterial, and unlikely to lead to
the discovery of admissible evidence. The information sought has no bearing whatsoever on the
merits of this Lawsuit. Defendant Giant Eagle, Inc. seeks to enforce a contractual forum-
selection clause, as previously enforced by the decision of another court. See generally
Defendant Giant Eagle, Inc.’s Motion to Dismiss for Collateral Estoppel or, in the Alternative,
Pursuant to the Governing Forum Selection Clause. But it is irrelevant and immaterial to the
enforcement of that forum-selection clause, and the application of the prior judgment enforcing
that clause, (i) whether any party not a signatory to that forum-selection clause is within or
would consent to the jurisdiction of a court in Pittsburgh, Pennsylvania, (ii) whether a court in
Pittsburgh would be a proper or convenient venue or forum with respect to such party, or (iii)
whether enforcement of that clause might require Plaintiff to litigate his claims in two forums.
See In re Int’l Profit Assocs., Inc., 274 S.W.3d 672, 680 (Tex. 2009); In re FC Stone, LLC, 348
S.W.3d 548, 552 (Tex. App.―Dallas 2011, orig. proceeding).

        (b) The Request is premature. It addresses a circumstance that might arise in the future,
rather than facts or circumstances already in existence.

       (c) The Request improperly applies the term “venue” to a court in Pennsylvania. See In re
Brown, 441 S.W.3d 405, 408 (Tex. App.―Dallas 2013, orig. proceeding) (“[F]orum and venue
have distinct legal meanings. A forum-selection agreement is one that chooses another state or
sovereign as the location for trial, whereas a venue-selection agreement chooses a particular
county or court within that state or sovereign.”).

       (d) The Request is the mirror image of Request 12 and is therefore improper. See CEBI
Metal Sanayi Ve Ticaret A.S. v. Garcia, 108 S.W.3d 464, 466 (Tex. App.―Houston [14th Dist.]
2003, no pet.).

       (e) The Request seeks the admission of a legal conclusion that is dependent on the
circumstances of the case, which is not only premature but improper, and ADS cannot admit or

DEFENDANT ADS ALLIANCE DATA SYSTEMS, INC.’S OBJECTIONS AND RESPONSES TO
PLAINTIFF’S FIRST REQUESTS FOR ADMISSION DIRECTED AT THRESHOLD ISSUES - Page 10


 Exhibits to Plaintiff Dickson Perry's Supplemental Brief                                 Page 27
 in Opposition to Giant Eagle's Motion to Dismiss
                                                                                              R260
deny a legal conclusion as to whether venue would be proper in Pittsburgh, Pennsylvania under
the current circumstances.

Request for Admissions No. 12:        Admit that venue would not be proper if this Lawsuit were
brought in a court in Pittsburgh, Pennsylvania.

        RESPONSE: ADS incorporates its Preliminary Objections as if set forth herein. ADS
further objects to this Request as follows:

        (a) The Request seeks information that is irrelevant, immaterial, and unlikely to lead to
the discovery of admissible evidence. The information sought has no bearing whatsoever on the
merits of this Lawsuit. Defendant Giant Eagle, Inc. seeks to enforce a contractual forum-
selection clause, as previously enforced by the decision of another court. See generally
Defendant Giant Eagle, Inc.’s Motion to Dismiss for Collateral Estoppel or, in the Alternative,
Pursuant to the Governing Forum Selection Clause. But it is irrelevant and immaterial to the
enforcement of that forum-selection clause, and the application of the prior judgment enforcing
that clause, (i) whether any party not a signatory to that forum-selection clause is within or
would consent to the jurisdiction of a court in Pittsburgh, Pennsylvania, (ii) whether a court in
Pittsburgh would be a proper or convenient venue or forum with respect to such party, or (iii)
whether enforcement of that clause might require Plaintiff to litigate his claims in two forums.
See In re Int’l Profit Assocs., Inc., 274 S.W.3d 672, 680 (Tex. 2009); In re FC Stone, LLC, 348
S.W.3d 548, 552 (Tex. App.―Dallas 2011, orig. proceeding).

        (b) The Request is premature. It addresses a circumstance that might arise in the future,
rather than facts or circumstances already in existence.

       (c) The Request improperly applies the term “venue” to a court in Pennsylvania. See In re
Brown, 441 S.W.3d 405, 408 (Tex. App.―Dallas 2013, orig. proceeding) (“[F]orum and venue
have distinct legal meanings. A forum-selection agreement is one that chooses another state or
sovereign as the location for trial, whereas a venue-selection agreement chooses a particular
county or court within that state or sovereign.”).

       (d) The Request is the mirror image of Request 11 and is therefore improper. See CEBI
Metal Sanayi Ve Ticaret A.S. v. Garcia, 108 S.W.3d 464, 466 (Tex. App.―Houston [14th Dist.]
2003, no pet.).

        (e) The Request seeks the admission of a legal conclusion that is dependent on the
circumstances of the case, which is not only premature but improper, and ADS cannot admit or
deny a legal conclusion as to whether venue would be proper in Pittsburgh, Pennsylvania under
the current circumstances.

Request for Admissions No. 13:        Admit that you would oppose the forum if this Lawsuit
were brought in a court in Pittsburgh, Pennsylvania.

        RESPONSE: ADS incorporates its Preliminary Objections as if set forth herein. ADS
further objects to this Request as follows:



DEFENDANT ADS ALLIANCE DATA SYSTEMS, INC.’S OBJECTIONS AND RESPONSES TO
PLAINTIFF’S FIRST REQUESTS FOR ADMISSION DIRECTED AT THRESHOLD ISSUES - Page 11


 Exhibits to Plaintiff Dickson Perry's Supplemental Brief                                 Page 28
 in Opposition to Giant Eagle's Motion to Dismiss
                                                                                              R261
       (a) The Request seeks disclosure of Defendants’ litigation strategy, which is protected
from disclosure by the work product doctrine, TEX. R. CIV. P. 192.5. See In re Culp, No. 09-10-
00308-CV, 2010 Tex. App. LEXIS 6702, *6-7 (Tex. App.―Beaumont July 16, 2010, orig.
proceeding); In re Bell Helicopter Textron, Inc., 87 S.W.3d 139, 150 (Tex. App.―Ft. Worth
2002, orig. proceeding).

        (b) The Request seeks information that is irrelevant, immaterial, and unlikely to lead to
the discovery of admissible evidence. The information sought has no bearing whatsoever on the
merits of this Lawsuit. Defendant Giant Eagle, Inc. seeks to enforce a contractual forum-
selection clause, as previously enforced by the decision of another court. See generally
Defendant Giant Eagle, Inc.’s Motion to Dismiss for Collateral Estoppel or, in the Alternative,
Pursuant to the Governing Forum Selection Clause. But it is irrelevant and immaterial to the
enforcement of that forum-selection clause, and the application of the prior judgment enforcing
that clause, (i) whether any party not a signatory to that forum-selection clause is within or
would consent to the jurisdiction of a court in Pittsburgh, Pennsylvania, (ii) whether a court in
Pittsburgh would be a proper or convenient venue or forum with respect to such party, or (iii)
whether enforcement of that clause might require Plaintiff to litigate his claims in two forums.
See In re Int’l Profit Assocs., Inc., 274 S.W.3d 672, 680 (Tex. 2009); In re FC Stone, LLC, 348
S.W.3d 548, 552 (Tex. App.―Dallas 2011, orig. proceeding).

        (c) The Request is premature. It addresses a circumstance that might arise in the future,
rather than facts or circumstances already in existence.

       (d) The Request is the mirror image of Request 14 and is therefore improper. See CEBI
Metal Sanayi Ve Ticaret A.S. v. Garcia, 108 S.W.3d 464, 466 (Tex. App.―Houston [14th Dist.]
2003, no pet.).

Request for Admissions No. 14:        Admit that you would not oppose the forum if this Lawsuit
were brought in a court in Pittsburgh, Pennsylvania.

        RESPONSE: ADS incorporates its Preliminary Objections as if set forth herein. ADS
further objects to this Request as follows:

       (a) The Request seeks disclosure of Defendants’ litigation strategy, which is protected
from disclosure by the work product doctrine, TEX. R. CIV. P. 192.5. See In re Culp, No. 09-10-
00308-CV, 2010 Tex. App. LEXIS 6702, *6-7 (Tex. App.―Beaumont July 16, 2010, orig.
proceeding); In re Bell Helicopter Textron, Inc., 87 S.W.3d 139, 150 (Tex. App.―Ft. Worth
2002, orig. proceeding).

        (b) The Request seeks information that is irrelevant, immaterial, and unlikely to lead to
the discovery of admissible evidence. The information sought has no bearing whatsoever on the
merits of this Lawsuit. Defendant Giant Eagle, Inc. seeks to enforce a contractual forum-
selection clause, as previously enforced by the decision of another court. See generally
Defendant Giant Eagle, Inc.’s Motion to Dismiss for Collateral Estoppel or, in the Alternative,
Pursuant to the Governing Forum Selection Clause. But it is irrelevant and immaterial to the
enforcement of that forum-selection clause, and the application of the prior judgment enforcing
that clause, (i) whether any party not a signatory to that forum-selection clause is within or


DEFENDANT ADS ALLIANCE DATA SYSTEMS, INC.’S OBJECTIONS AND RESPONSES TO
PLAINTIFF’S FIRST REQUESTS FOR ADMISSION DIRECTED AT THRESHOLD ISSUES - Page 12


 Exhibits to Plaintiff Dickson Perry's Supplemental Brief                                 Page 29
 in Opposition to Giant Eagle's Motion to Dismiss
                                                                                              R262
would consent to the jurisdiction of a court in Pittsburgh, Pennsylvania, (ii) whether a court in
Pittsburgh would be a proper or convenient venue or forum with respect to such party, or (iii)
whether enforcement of that clause might require Plaintiff to litigate his claims in two forums.
See In re Int’l Profit Assocs., Inc., 274 S.W.3d 672, 680 (Tex. 2009); In re FC Stone, LLC, 348
S.W.3d 548, 552 (Tex. App.―Dallas 2011, orig. proceeding).

        (c) The Request is premature. It addresses a circumstance that might arise in the future,
rather than facts or circumstances already in existence.

       (d) The Request is the mirror image of Request 13 and is therefore improper. See CEBI
Metal Sanayi Ve Ticaret A.S. v. Garcia, 108 S.W.3d 464, 466 (Tex. App.―Houston [14th Dist.]
2003, no pet.).

Request for Admissions No. 15:        Admit that you would consent to the forum if this Lawsuit
were brought in a court in Pittsburgh, Pennsylvania.

        RESPONSE: ADS incorporates its Preliminary Objections as if set forth herein. ADS
further objects to this Request as follows:

       (a) The Request seeks disclosure of Defendants’ litigation strategy, which is protected
from disclosure by the work product doctrine, TEX. R. CIV. P. 192.5. See In re Culp, No. 09-10-
00308-CV, 2010 Tex. App. LEXIS 6702, *6-7 (Tex. App.―Beaumont July 16, 2010, orig.
proceeding); In re Bell Helicopter Textron, Inc., 87 S.W.3d 139, 150 (Tex. App.―Ft. Worth
2002, orig. proceeding).

        (b) The Request seeks information that is irrelevant, immaterial, and unlikely to lead to
the discovery of admissible evidence. The information sought has no bearing whatsoever on the
merits of this Lawsuit. Defendant Giant Eagle, Inc. seeks to enforce a contractual forum-
selection clause, as previously enforced by the decision of another court. See generally
Defendant Giant Eagle, Inc.’s Motion to Dismiss for Collateral Estoppel or, in the Alternative,
Pursuant to the Governing Forum Selection Clause. But it is irrelevant and immaterial to the
enforcement of that forum-selection clause, and the application of the prior judgment enforcing
that clause, (i) whether any party not a signatory to that forum-selection clause is within or
would consent to the jurisdiction of a court in Pittsburgh, Pennsylvania, (ii) whether a court in
Pittsburgh would be a proper or convenient venue or forum with respect to such party, or (iii)
whether enforcement of that clause might require Plaintiff to litigate his claims in two forums.
See In re Int’l Profit Assocs., Inc., 274 S.W.3d 672, 680 (Tex. 2009); In re FC Stone, LLC, 348
S.W.3d 548, 552 (Tex. App.―Dallas 2011, orig. proceeding).

        (c) The Request is premature. It addresses a circumstance that might arise in the future,
rather than facts or circumstances already in existence.

       (d) The Request is the mirror image of Request 16 and is therefore improper. See CEBI
Metal Sanayi Ve Ticaret A.S. v. Garcia, 108 S.W.3d 464, 466 (Tex. App.―Houston [14th Dist.]
2003, no pet.).




DEFENDANT ADS ALLIANCE DATA SYSTEMS, INC.’S OBJECTIONS AND RESPONSES TO
PLAINTIFF’S FIRST REQUESTS FOR ADMISSION DIRECTED AT THRESHOLD ISSUES - Page 13


 Exhibits to Plaintiff Dickson Perry's Supplemental Brief                                 Page 30
 in Opposition to Giant Eagle's Motion to Dismiss
                                                                                              R263
Request for Admissions No. 16:       Admit that you would not consent to the forum if this
Lawsuit were brought in a court in Pittsburgh, Pennsylvania.

        RESPONSE: ADS incorporates its Preliminary Objections as if set forth herein. ADS
further objects to this Request as follows:

       (a) The Request seeks disclosure of Defendants’ litigation strategy, which is protected
from disclosure by the work product doctrine, TEX. R. CIV. P. 192.5. See In re Culp, No. 09-10-
00308-CV, 2010 Tex. App. LEXIS 6702, *6-7 (Tex. App.―Beaumont July 16, 2010, orig.
proceeding); In re Bell Helicopter Textron, Inc., 87 S.W.3d 139, 150 (Tex. App.―Ft. Worth
2002, orig. proceeding).

        (b) The Request seeks information that is irrelevant, immaterial, and unlikely to lead to
the discovery of admissible evidence. The information sought has no bearing whatsoever on the
merits of this Lawsuit. Defendant Giant Eagle, Inc. seeks to enforce a contractual forum-
selection clause, as previously enforced by the decision of another court. See generally
Defendant Giant Eagle, Inc.’s Motion to Dismiss for Collateral Estoppel or, in the Alternative,
Pursuant to the Governing Forum Selection Clause. But it is irrelevant and immaterial to the
enforcement of that forum-selection clause, and the application of the prior judgment enforcing
that clause, (i) whether any party not a signatory to that forum-selection clause is within or
would consent to the jurisdiction of a court in Pittsburgh, Pennsylvania, (ii) whether a court in
Pittsburgh would be a proper or convenient venue or forum with respect to such party, or (iii)
whether enforcement of that clause might require Plaintiff to litigate his claims in two forums.
See In re Int’l Profit Assocs., Inc., 274 S.W.3d 672, 680 (Tex. 2009); In re FC Stone, LLC, 348
S.W.3d 548, 552 (Tex. App.―Dallas 2011, orig. proceeding).

        (c) The Request is premature. It addresses a circumstance that might arise in the future,
rather than facts or circumstances already in existence.

       (d) The Request is the mirror image of Request 15 and is therefore improper. See CEBI
Metal Sanayi Ve Ticaret A.S. v. Garcia, 108 S.W.3d 464, 466 (Tex. App.―Houston [14th Dist.]
2003, no pet.).

Request for Admissions No. 17:        Admit that that the forum would be proper if this Lawsuit
were brought in a court in Pittsburgh, Pennsylvania.

        RESPONSE: ADS incorporates its Preliminary Objections as if set forth herein. ADS
further objects to this Request as follows:

        (a) The Request seeks information that is irrelevant, immaterial, and unlikely to lead to
the discovery of admissible evidence. The information sought has no bearing whatsoever on the
merits of this Lawsuit. Defendant Giant Eagle, Inc. seeks to enforce a contractual forum-
selection clause, as previously enforced by the decision of another court. See generally
Defendant Giant Eagle, Inc.’s Motion to Dismiss for Collateral Estoppel or, in the Alternative,
Pursuant to the Governing Forum Selection Clause. But it is irrelevant and immaterial to the
enforcement of that forum-selection clause, and the application of the prior judgment enforcing
that clause, (i) whether any party not a signatory to that forum-selection clause is within or
would consent to the jurisdiction of a court in Pittsburgh, Pennsylvania, (ii) whether a court in

DEFENDANT ADS ALLIANCE DATA SYSTEMS, INC.’S OBJECTIONS AND RESPONSES TO
PLAINTIFF’S FIRST REQUESTS FOR ADMISSION DIRECTED AT THRESHOLD ISSUES - Page 14


 Exhibits to Plaintiff Dickson Perry's Supplemental Brief                                 Page 31
 in Opposition to Giant Eagle's Motion to Dismiss
                                                                                              R264
Pittsburgh would be a proper or convenient venue or forum with respect to such party, or (iii)
whether enforcement of that clause might require Plaintiff to litigate his claims in two forums.
See In re Int’l Profit Assocs., Inc., 274 S.W.3d 672, 680 (Tex. 2009); In re FC Stone, LLC, 348
S.W.3d 548, 552 (Tex. App.―Dallas 2011, orig. proceeding).

        (b) The Request is premature. It addresses a circumstance that might arise in the future,
rather than facts or circumstances already in existence.

       (c) The Request is the mirror image of Request 18 and is therefore improper. See CEBI
Metal Sanayi Ve Ticaret A.S. v. Garcia, 108 S.W.3d 464, 466 (Tex. App.―Houston [14th Dist.]
2003, no pet.).

       (d) The Request seeks the admission of a legal conclusion that is dependent on the
circumstances of the case, which is not only premature but improper and ADS cannot admit or
deny a legal conclusion as to whether the forum would be proper in Pittsburgh, Pennsylvania
under the current circumstances.

Request for Admissions No. 18:        Admit that the forum would not be proper if this Lawsuit
were brought in a court in Pittsburgh, Pennsylvania.

        RESPONSE: ADS incorporates its Preliminary Objections as if set forth herein. ADS
further objects to this Request as follows:

        (a) The Request seeks information that is irrelevant, immaterial, and unlikely to lead to
the discovery of admissible evidence. The information sought has no bearing whatsoever on the
merits of this Lawsuit. Defendant Giant Eagle, Inc. seeks to enforce a contractual forum-
selection clause, as previously enforced by the decision of another court. See generally
Defendant Giant Eagle, Inc.’s Motion to Dismiss for Collateral Estoppel or, in the Alternative,
Pursuant to the Governing Forum Selection Clause. But it is irrelevant and immaterial to the
enforcement of that forum-selection clause, and the application of the prior judgment enforcing
that clause, (i) whether any party not a signatory to that forum-selection clause is within or
would consent to the jurisdiction of a court in Pittsburgh, Pennsylvania, (ii) whether a court in
Pittsburgh would be a proper or convenient venue or forum with respect to such party, or (iii)
whether enforcement of that clause might require Plaintiff to litigate his claims in two forums.
See In re Int’l Profit Assocs., Inc., 274 S.W.3d 672, 680 (Tex. 2009); In re FC Stone, LLC, 348
S.W.3d 548, 552 (Tex. App.―Dallas 2011, orig. proceeding).

        (b) The Request is premature. It addresses a circumstance that might arise in the future,
rather than facts or circumstances already in existence.

       (c) The Request is the mirror image of Request 17 and is therefore improper. See CEBI
Metal Sanayi Ve Ticaret A.S. v. Garcia, 108 S.W.3d 464, 466 (Tex. App.―Houston [14th Dist.]
2003, no pet.).

       (d) The Request seeks the admission of a legal conclusion that is dependent on the
circumstances of the case, which is not only premature but improper, and ADS cannot admit or
deny a legal conclusion as to whether the forum would be proper in Pittsburgh, Pennsylvania
under the current circumstances.

DEFENDANT ADS ALLIANCE DATA SYSTEMS, INC.’S OBJECTIONS AND RESPONSES TO
PLAINTIFF’S FIRST REQUESTS FOR ADMISSION DIRECTED AT THRESHOLD ISSUES - Page 15


 Exhibits to Plaintiff Dickson Perry's Supplemental Brief                                 Page 32
 in Opposition to Giant Eagle's Motion to Dismiss
                                                                                              R265
Request for Admissions No. 19:        Admit that it would be inconvenient for you if this Lawsuit
were brought in a court in Pittsburgh, Pennsylvania.

        RESPONSE: ADS incorporates its Preliminary Objections as if set forth herein. ADS
further objects to this Request as follows:

        (a) The Request seeks information that is irrelevant, immaterial, and unlikely to lead to
the discovery of admissible evidence. The information sought has no bearing whatsoever on the
merits of this Lawsuit. Defendant Giant Eagle, Inc. seeks to enforce a contractual forum-
selection clause, as previously enforced by the decision of another court. See generally
Defendant Giant Eagle, Inc.’s Motion to Dismiss for Collateral Estoppel or, in the Alternative,
Pursuant to the Governing Forum Selection Clause. But it is irrelevant and immaterial to the
enforcement of that forum-selection clause, and the application of the prior judgment enforcing
that clause, (i) whether any party not a signatory to that forum-selection clause is within or
would consent to the jurisdiction of a court in Pittsburgh, Pennsylvania, (ii) whether a court in
Pittsburgh would be a proper or convenient venue or forum with respect to such party, or (iii)
whether enforcement of that clause might require Plaintiff to litigate his claims in two forums.
See In re Int’l Profit Assocs., Inc., 274 S.W.3d 672, 680 (Tex. 2009); In re FC Stone, LLC, 348
S.W.3d 548, 552 (Tex. App.―Dallas 2011, orig. proceeding).

        (b) The Request is premature. It addresses a circumstance that might arise in the future,
rather than facts or circumstances already in existence.




DEFENDANT ADS ALLIANCE DATA SYSTEMS, INC.’S OBJECTIONS AND RESPONSES TO
PLAINTIFF’S FIRST REQUESTS FOR ADMISSION DIRECTED AT THRESHOLD ISSUES - Page 16


 Exhibits to Plaintiff Dickson Perry's Supplemental Brief                                 Page 33
 in Opposition to Giant Eagle's Motion to Dismiss
                                                                                              R266
Date: August 17, 2015              Respectfully submitted,


                                     /s/ Patrick G. O’Brien
                                   Lisa S. Gallerano
                                   State Bar No. 07589500
                                   lgallerano@akingump.com
                                   Patrick G. O’Brien
                                   State Bar No. 24046541
                                   pobrien@akingump.com
                                   AKIN GUMP STRAUSS HAUER & FELD LLP
                                   1700 Pacific Ave., Suite 4100
                                   Dallas, Texas 75201
                                   214-969-2800 Telephone
                                   214-969-4343 Facsimile

                                   ATTORNEYS FOR DEFENDANT
                                   ADS ALLIANCE DATA SYSTEMS, INC.




                              CERTIFICATE OF SERVICE

       The undersigned certifies that a copy of the foregoing instrument was served upon the
attorneys of record in the above cause, in accordance with Rule 21a, Texas Rules of Civil
Procedure, on August 17, 2015.



                                   /s/Patrick G. O’Brien




DEFENDANT ADS ALLIANCE DATA SYSTEMS, INC.’S OBJECTIONS AND RESPONSES TO
PLAINTIFF’S FIRST REQUESTS FOR ADMISSION DIRECTED AT THRESHOLD ISSUES - Page 17


 Exhibits to Plaintiff Dickson Perry's Supplemental Brief                            Page 34
 in Opposition to Giant Eagle's Motion to Dismiss
                                                                                         R267
     EXHIBIT 3



Exhibits to Plaintiff Dickson Perry's Supplemental Brief   Page 35
in Opposition to Giant Eagle's Motion to Dismiss




                                                           R268
Exhibits to Plaintiff Dickson Perry's Supplemental Brief   Page 36
in Opposition to Giant Eagle's Motion to Dismiss
                                                               R269
Exhibits to Plaintiff Dickson Perry's Supplemental Brief   Page 37
in Opposition to Giant Eagle's Motion to Dismiss
                                                               R270
Exhibits to Plaintiff Dickson Perry's Supplemental Brief   Page 38
in Opposition to Giant Eagle's Motion to Dismiss
                                                               R271
Exhibits to Plaintiff Dickson Perry's Supplemental Brief   Page 39
in Opposition to Giant Eagle's Motion to Dismiss
                                                               R272
Exhibits to Plaintiff Dickson Perry's Supplemental Brief   Page 40
in Opposition to Giant Eagle's Motion to Dismiss
                                                               R273
Exhibits to Plaintiff Dickson Perry's Supplemental Brief   Page 41
in Opposition to Giant Eagle's Motion to Dismiss
                                                               R274
Exhibits to Plaintiff Dickson Perry's Supplemental Brief   Page 42
in Opposition to Giant Eagle's Motion to Dismiss
                                                               R275
Exhibits to Plaintiff Dickson Perry's Supplemental Brief   Page 43
in Opposition to Giant Eagle's Motion to Dismiss
                                                               R276
Exhibits to Plaintiff Dickson Perry's Supplemental Brief   Page 44
in Opposition to Giant Eagle's Motion to Dismiss
                                                               R277
Exhibits to Plaintiff Dickson Perry's Supplemental Brief   Page 45
in Opposition to Giant Eagle's Motion to Dismiss
                                                               R278
Exhibits to Plaintiff Dickson Perry's Supplemental Brief   Page 46
in Opposition to Giant Eagle's Motion to Dismiss
                                                               R279
Exhibits to Plaintiff Dickson Perry's Supplemental Brief   Page 47
in Opposition to Giant Eagle's Motion to Dismiss
                                                               R280
Exhibits to Plaintiff Dickson Perry's Supplemental Brief   Page 48
in Opposition to Giant Eagle's Motion to Dismiss
                                                               R281
Exhibits to Plaintiff Dickson Perry's Supplemental Brief   Page 49
in Opposition to Giant Eagle's Motion to Dismiss
                                                               R282
Exhibits to Plaintiff Dickson Perry's Supplemental Brief   Page 50
in Opposition to Giant Eagle's Motion to Dismiss
                                                               R283
Exhibits to Plaintiff Dickson Perry's Supplemental Brief   Page 51
in Opposition to Giant Eagle's Motion to Dismiss
                                                               R284
Exhibits to Plaintiff Dickson Perry's Supplemental Brief   Page 52
in Opposition to Giant Eagle's Motion to Dismiss
                                                               R285
Tab E
                                   CAUSE NO. DC-15-03853

DICKSON PERRY, derivatively on                     §              IN THE DISTRICT COURT
behalf of EXCENTUS CORPORATION,                    §
                                                   §
         Plaintiff,                                §
                                                   §
vs.                                                §
                                                   §
EXCENTUS CORPORATION,                              §              DALLAS COUNTY, TEXAS
BRANDON LOGSDON, JIM MILLS,                        §
GIANT EAGLE, INC., DAVID                           §
SHAPIRA, DANIEL SHAPIRA, AUTO-                     §
GAS SYSTEMS, INC., RANDY                           §
NICHOLSON, and                                     §
ALLIANCE DATA SYSTEMS, INC.,                       §
                                                   §
         Defendants,                               §             68TH JUDICIAL DISTRICT

 DEFENDANT GIANT EAGLE, INC.’S REPLY IN SUPPORT OF ITS MOTION TO
DISMISS FOR COLLATERAL ESTOPPEL OR, IN THE ALTERNATIVE, PURSUANT
            TO THE GOVERNING FORUM SELECTION CLAUSE

         Defendant Giant Eagle, Inc. (“Giant Eagle”) files this Reply to Plaintiff Dickson Perry’s

(“Perry”) Response to Defendant Giant Eagle’s Motion to Dismiss for Collateral Estoppel or, in

the alternative, Pursuant to the Forum Selection Clause (“Motion”).

         This lawsuit is a continuation of Perry’s long-running hostility toward Giant Eagle’s

representatives on the Excentus Board of Directors, positions Giant Eagle obtained in exchange

for a significant investment in Excentus through the Stock Purchase Agreements (“SP

Agreements”). Try as he might, Perry cannot plead around these SP Agreements and the forum

selection clauses therein which, in the end, provide a complete defense to the claims against

Giant Eagle. As Judge Boyle’s initial ruling reflects, the SP Agreements are at the heart of and

define the relationship between Excentus and Giant Eagle. See Excentus Corp. v. Giant Eagle,

Inc., 3:11-cv-03331, 2012 WL 2525594 (N.D. Tex. July 2, 2012) (the “First Texas Case”).

Indeed, after Excentus re-filed its lawsuit in Pennsylvania, another federal judge came to the

DEFENDANT GIANT EAGLE, INC.’S REPLY IN SUPPORT OF ITS MOTION TO DISMISS FOR COLLATERAL
ESTOPPEL OR, IN THE ALTERNATIVE, PURSUANT TO THE GOVERNING FORUM SELECTION CLAUSE          Page 1
A0946626.9/248593.docx


                                                                                              R286
same conclusion, enforcing the forum selection clause even though this decision required the

parties to litigate in two separate forums. See Excentus Corp. v. Giant Eagle, Inc., No. CIV.A.

13-178, 2014 WL 923520, at *10 (W.D. Pa. Mar. 10, 2014) (“Excentus II”) (attached as Exhibit

1). Giant Eagle files this Reply to address four arguments raised in Perry’s Response.

    1. The Issue of Whether the Forum Selection Clause Applies was Already Litigated
       and Decided in the First Texas Case

         The court in the First Texas Case held that the forum selection clause in the SP

Agreements between Giant Eagle and Excentus applies when, as in this case, those Agreements

are raised as a defense. Judge Boyle’s holding was crystal clear: even if the claims asserted do

not rely on the SP Agreements, the forum selection clause applies so long as the responding

party is relying on them as a defense. Excentus, 2012 WL 2525594, at *4 (“[T]he Court must

look to the Stock Purchase Agreements to determine whether Giant Eagle’s defenses are valid,

and therefore the forum selection clauses contained in them are applicable. Excentus’ claims do

not rely on the Stock Purchase Agreements, but resolution of these claims clearly requires the

Court to construe the Stock Purchase Agreements, given Giant Eagle’s reliance on the

Agreements as a defense.”).

         Here, Giant Eagle relies on collateral estoppel because the issue decided by Judge Boyle

in the First Texas Case – the applicability of the forum selection clause when the SP Agreements

are raised as a defense – is precisely the issue now before this Court. The SP Agreements

provide Giant Eagle with a complete defense to Perry’s claims, and a court will have to construe

the Agreements to determine the validity of that defense. As Judge Boyle already determined in

the First Texas Case, this triggers the application of the forum selection clause.

         Whether the conduct described in the Petition occurred before or after Judge Boyle’s

opinion is wholly irrelevant to this issue. Collateral estoppel, also known as issue preclusion,

DEFENDANT GIANT EAGLE, INC.’S REPLY IN SUPPORT OF ITS MOTION TO DISMISS FOR COLLATERAL
ESTOPPEL OR, IN THE ALTERNATIVE, PURSUANT TO THE GOVERNING FORUM SELECTION CLAUSE         Page 2
A0946626.9/248593.docx


                                                                                             R287
prevents the re-litigation of issues that have already been decided. Perry’s Response brief

focuses on the timing of the alleged conduct, thereby confusing collateral estoppel with “claim

preclusion” or res judicata, which precludes a party from asserting claims that were or could

have been brought in prior litigation. Giant Eagle’s Motion, however, does not seek to bar any

claims on res judicata grounds. Rather, Giant Eagle argues that Perry is collaterally estopped

from bringing these claims against Giant Eagle in Texas because Judge Boyle already decided

that Texas is not a proper forum due to the governing forum selection clause in the SP

Agreements. Pursuant to Judge Boyle’s holding, the mandatory forum selection clause applies

and this suit against Giant Eagle and the Shapiras must be brought in Pittsburgh, Pennsylvania.

This issue cannot be re-litigated.

         In addition to distorting the straightforward issue presently before the Court, Perry’s

Response asserts many of the exact same arguments that Judge Boyle rejected in the First Texas

Case. For example, Perry’s Response purports to define the meaning of “arise out of” and argues

that the forum selection clause does not apply because his claims do not “arise out of” the SP

Agreements. (See Response at 12-14). In the First Texas Case, Excentus made precisely the

same argument, see Excentus, 2012 WL 2525594 at *8 (“Excentus argues that its tort claims fall

outside the scope of the forum selection clauses because … none of the elements of its claims

‘arise out of’ the Stock Purchase Agreements.”), and it cannot be re-litigated here. Judge Boyle

held that the forum selection clause applies when the SP Agreements are raised as a defense to

the claims asserted, regardless of whether or not, as Perry argues, the SP Agreements are the

“source of the right that Perry seeks to vindicate.” (Response at 13).




DEFENDANT GIANT EAGLE, INC.’S REPLY IN SUPPORT OF ITS MOTION TO DISMISS FOR COLLATERAL
ESTOPPEL OR, IN THE ALTERNATIVE, PURSUANT TO THE GOVERNING FORUM SELECTION CLAUSE        Page 3
A0946626.9/248593.docx


                                                                                            R288
    2. Perry’s Petition Directly Implicates and Requires an Analysis of the Parties’ Rights
       Under the SP Agreements

         Perry alleges that “the nucleus” of this lawsuit involves a settlement agreement that

resolved the parties’ underlying litigation, and reaffirmed Giant Eagle’s and Excentus’ respective

rights under the SP Agreements. (See Response at p. 4, ¶ 6). Perry’s Petition seeks to rescind

the Settlement Agreement on the grounds that it was a “sham.” First Am. Pet. at ¶ 60.

         Of course, to determine whether the Settlement Agreement is a “sham,” a Court would

have to engage in a fairness analysis by considering the merits of the underlying litigation that

was resolved by that agreement. After all, if Giant Eagle and the Shapiras are correct about the

parties’ respective rights under those Agreements (and they are), then the Settlement Agreement

is not a “sham.” There is simply no way to analyze whether the Settlement Agreement is a

“sham” without analyzing the parties’ rights under the SP Agreements. Thus, we are right back

where we started – construing the SP Agreements to determine the parties’ respective rights

thereunder, which brings the present case squarely within Judge Boyle’s opinion. To allow re-

litigation of the parties’ rights under the SP Agreements in a Texas court when a federal court

has already held that Texas is the wrong forum for such litigation would be a blatant end run

around of the SP Agreements and a direct violation of the principles of collateral estoppel.1




1
  For some reason, Perry attempts to portray Giant Eagle as seeking to “transform Mr. Perry’s pleading into a patent
infringement claim.” (See Response at 12). This is not at all what Giant Eagle is arguing. Whether these are
“patent infringement” claims or something else is not relevant; all that is relevant is that the SP Agreements provide
Giant Eagle with a defense to the claims asserted. Along these lines, paragraphs 15-17 of the Response attempt to
portray Judge Boyle’s opinion as being entirely reliant on the fact that there were patent infringement claims at
issue. Nothing about Judge Boyle’s opinion, however, was dependent on Excentus bringing “patent infringement”
claims; rather, the determinative factor was that the court had to construe the SP Agreements to assess Giant Eagle’s
defenses. Indeed the very sentence that Perry deceptively excerpts makes clear that the opinion is not limited to, or
reliant upon, there being a claim for patent infringement. Excentus, 2012 WL 2525594, at *4 (“Without deciding
whether the Stock Purchase Agreements do in fact grant Giant Eagle a license to Excentus’ patents and are a defense
to the breach of duty of loyalty and unfair completion claims, Giant Eagle’s defense requires the Court to interpret
the Stock Purchase Agreements.”) (emphasis added).
DEFENDANT GIANT EAGLE, INC.’S REPLY IN SUPPORT OF ITS MOTION TO DISMISS FOR COLLATERAL
ESTOPPEL OR, IN THE ALTERNATIVE, PURSUANT TO THE GOVERNING FORUM SELECTION CLAUSE                             Page 4
A0946626.9/248593.docx


                                                                                                                 R289
    3. Collateral Estoppel Applies Regardless of Whether Perry was a Named Party in the
       First Texas Case

         This case is a derivative action brought by Perry, an Excentus shareholder, on behalf of

Excentus. See, e.g., First Am. Pet. at 1 (“Plaintiff Dickson Perry, derivatively on behalf of

Excentus, files his First Amended Petition …”). Perry is suing to enforce Excentus’ rights. He

is alleging that Giant Eagle and the Shapiras breached their fiduciary duties to Excentus and

engaged in unfair competition with Excentus.          He is claiming that these actions harmed

Excentus. He is seeking recovery for Excentus. See First Am. Pet. at ¶¶ 69, 72, 76, 79

(“Excentus is entitled to injunctive relief, actual damages, and punitive damages”); id. at p. 26,

#1 (requesting “a judgment for Plaintiff on behalf of Excentus…”). He is not asserting any

claims in his personal capacity. Thus, both the First Texas Case (brought by Excentus) and the

present case (brought derivatively on behalf of Excentus) purport to represent the interests of

Excentus shareholders against Giant Eagle and the Shapiras. The privity element of collateral

estoppel is satisfied. (See Motion at 15-16).

         To muddle this straightforward analysis, Perry makes vague references to potentially

seeking personal recovery and ruminates that he “may need to request” that the court treat this as

a direct action under TEX. BUS. ORG. CODE § 21.563(c). To Perry, the mere possibility that he

may make such a request means that “this case should stay in Texas.” (See Response at 8-9).

Perry’s argument – aside from having no relationship to the lawsuit he actually filed – is wrong

and has no bearing on the collateral estoppel analysis.

         The possibility that Perry may, at some unspecified future time, request that any potential

future damages be paid to him directly rather than to other shareholders does not make this case

anything other than a derivative action. Such a request (even if granted) would not affect

anything about this case other than who ultimately receives any recovery.                Swank v.

DEFENDANT GIANT EAGLE, INC.’S REPLY IN SUPPORT OF ITS MOTION TO DISMISS FOR COLLATERAL
ESTOPPEL OR, IN THE ALTERNATIVE, PURSUANT TO THE GOVERNING FORUM SELECTION CLAUSE            Page 5
A0946626.9/248593.docx


                                                                                                R290
Cunningham, 258 S.W.3d 647, 665 (Tex. App. 2008) (“A trial court’s decision to treat an action

as a direct action under Section 21.563(c) so as to allow recovery to be paid directly to a

shareholder plaintiff, as opposed to the corporation, does not mean that the action is no longer a

derivative proceeding.”). Regardless of who ultimately recovers damages, the claims Perry

asserts are still Excentus’ claims and the alleged wrong was done to Excentus.                          A forum

selection clause in a contract with a third party does not disappear just because a lawsuit is

initiated derivatively by a disgruntled shareholder.2 Perry’s contemplation about his future

litigation strategy cannot change the fact that Excentus is bound by the SP Agreements, and

those Agreements apply to this case.

    4. The Interests of Justice Strongly Favor Enforcement of the Forum Selection Clause

         Perry argues that enforcement of the forum selection clause would be “manifestly unjust”

to him because he could not have foreseen that the SP Agreements would require him “to litigate

any personal claims” in Pittsburgh, and re-filing in Pittsburgh would be a “an immense burden

upon [his] time and resources.” (Perry Aff. at ¶ 11). Perry’s last minute attempt to introduce

new facts should have no impact on the purely legal issue before the court; namely, the

preclusive effect of Judge Boyle’s opinion.

         Perry’s assertion that he could not have foreseen having to sue Giant Eagle personally in

Pittsburgh is not relevant to this lawsuit. Perry is not seeking to litigate personal claims against

Giant Eagle and he is not suing in his personal capacity. He is bringing derivative claims on


2
  Perry also asserts that he is not bound by Judge Boyle’s decision because he is not a signatory to the SP
Agreements. (See Response at 14). Judge Boyle’s opinion actually addresses this issue as well. Judge Boyle held
that the Shapiras – who were not signatories to the SP Agreements – could invoke the forum selection clause “given
the relatedness of the Shapiras to the dispute between Excentus and Giant Eagle.” Excentus, at *4 n.10. See also
Excel Mktg. Solutions, Inc. v. Direct Fin. Solutions LLC, 2011 WL 1833022, at *6 (N.D. Tex. May 13, 2011) (“A
non-party can be bound to a forum selection clause if the nonparty is closely related to the dispute such that it
becomes foreseeable that it will be bound.”). That same logic applies to Perry – not only did he sign the SP
Agreements on behalf of Excentus, but the Petition chronicles how closely related and inextricably linked he was to
Excentus as its founder, CEO, and Chairman of its Board of Directors. As such, he is bound by the Agreements.
DEFENDANT GIANT EAGLE, INC.’S REPLY IN SUPPORT OF ITS MOTION TO DISMISS FOR COLLATERAL
ESTOPPEL OR, IN THE ALTERNATIVE, PURSUANT TO THE GOVERNING FORUM SELECTION CLAUSE                          Page 6
A0946626.9/248593.docx


                                                                                                              R291
behalf of Excentus to enforce Excentus’ rights and to remedy alleged wrongs that the Defendants

allegedly inflicted upon Excentus. It was undoubtedly foreseeable to Excentus – and certainly to

Perry, who signed the SP Agreements on behalf of Excentus – that if Excentus chose to sue

Giant Eagle to enforce Excentus’ rights, it would have do to so in Pittsburgh. As Judge Boyle

found, this was the essence of the parties’ bargain with respect to the forum selection clause, and

it should be honored. Excentus, 2012 WL 2525594 at *3; see also Atl. Marine Const. Co. v. U.S.

Dist. Court for W. Dist. of Texas, 134 S. Ct. 568, 583 (2013) (“When parties have contracted in

advance to litigate disputes in a particular forum, courts should not unnecessarily disrupt the

parties’ settled expectations. A forum-selection clause, after all, may have figured centrally in

the parties’ negotiations and may have affected how they set monetary and other contractual

terms; it may, in fact, have been a critical factor in their agreement to do business together in the

first place. In all but the most unusual cases, therefore, ‘the interest of justice’ is served by

holding parties to their bargain.”); In re Int’l Profit Assocs., Inc., 274 S.W.3d 672, 675 (Tex.

2009) (“Forum-selection clauses are generally enforceable, and a party attempting to show that

such a clause should not be enforced bears a heavy burden.”).

         Perry argues now that it would be “wholly contrary to one of the very aims of forum

selection clauses” if he had to sue Giant Eagle in Pennsylvania while also pursuing an arbitration

in Texas and civil litigation against the remaining defendants in this case. (Response at 17).

Even putting aside the fact that Perry initiated all of this litigation and cannot now complain that

it is too much to bear, any inconvenience that results from enforcement of the forum selection

clause is by design, as Excentus and Giant Eagle bargained for this mutually inconvenient forum

selection clause precisely to discourage lawsuits like this one.       The purpose of the forum

selection clause was readily apparent to Judge Boyle when she applied it to Excentus in the First


DEFENDANT GIANT EAGLE, INC.’S REPLY IN SUPPORT OF ITS MOTION TO DISMISS FOR COLLATERAL
ESTOPPEL OR, IN THE ALTERNATIVE, PURSUANT TO THE GOVERNING FORUM SELECTION CLAUSE             Page 7
A0946626.9/248593.docx


                                                                                                R292
Texas Case. See Excentus, 2012 WL 2525594 at *3 (“[T]he Court finds that it is neither unfair

nor unreasonable to require the party initiating litigation to sue in the county of the respondent,

as agreed to by the parties, which evidences’ the parties’ apparent desire to discourage

litigation.”) (emphasis added); see also Abbott Labs v. Takeda Pharm. Co., 476 F.3d 421, 422

(7th Cir. 2007) (“The purpose of specifying two forums in this way is to discourage either side

from instituting litigation, because whoever sues must litigate on the other party’s turf.”).

         In addition, Excentus itself enforced the forum selection clause against Giant Eagle

precisely to achieve the multi-forum litigation Perry now claims would be “wholly contrary” to

the purpose of the clause. After the First Texas Case was dismissed, Excentus re-filed against

Giant Eagle in the Western District of Pennsylvania. Giant Eagle asserted counterclaims against

Excentus, and Excentus moved to dismiss Giant Eagle’s counterclaims on the grounds that the

forum selection clause required that Giant Eagle’s counterclaims be brought in Texas. The court

agreed with Excentus’ position and, accordingly, severed Giant Eagle’s claims and transferred

them to Texas. Excentus II, 2014 WL 923520, at *10 (“it is appropriate for a court to sever

claims subject to a valid forum selection clause”). The court held that the forum selection clause

permits litigation involving overlapping issues to take place in multiple venues despite potential

concerns about judicial economy and efficiency. Excentus II, 2014 WL 923520, at *10 (holding

that severance is appropriate “even where a party opposing the severance argues … that

severance would be a waste of judicial resources, and severance would severely prejudice

them.”) (quotations and alterations omitted). The end result was that related litigation proceeded

in two separate forums – Excentus pursued its claims against Giant Eagle in Pennsylvania, and

Giant Eagle pursued its claims against Excentus in Texas.




DEFENDANT GIANT EAGLE, INC.’S REPLY IN SUPPORT OF ITS MOTION TO DISMISS FOR COLLATERAL
ESTOPPEL OR, IN THE ALTERNATIVE, PURSUANT TO THE GOVERNING FORUM SELECTION CLAUSE               Page 8
A0946626.9/248593.docx


                                                                                                  R293
         Ultimately, two separate federal courts have strictly enforced the forum selection and

have found that any inconvenience arising from its enforcement is irrelevant because that is

exactly what Giant Eagle and Excentus intended. Excentus, 2012 WL 2525594, at *3; Excentus

II, 2014 WL 923520, at *10. See also Atl. Marine, 134 S. Ct. at 82 (“When parties agree to a

forum-selection clause, they waive the right to challenge the preselected forum as inconvenient

or less convenient for themselves or their witnesses, or for their pursuit of the litigation”). Giant

Eagle and Excentus each bargained for the mutually inconvenient forum selection clause and

each has enforced it. A shareholder cannot bring a derivative action on behalf of a corporation

and then pick and choose which corporate agreements should apply based on which ones better

accommodate the shareholder’s other lawsuits.

                                         CONCLUSION

         For the reasons stated above, Giant Eagle respectfully requests that this Court GRANT its

Motion to Dismiss.

                                                      Respectfully Submitted,


                                                      /s/ Orrin L. Harrison III
                                                      Orrin L. Harrison III
                                                        Bar No. 09130700
                                                        oharrison@ghetrial.com
                                                      GRUBER HURST ELROD JOHANSEN
                                                      HAIL SHANK, LLP
                                                      1445 Ross Avenue, Suite 2500
                                                      Dallas, TX 75202
                                                      Telephone: 214-855-6828
                                                      Fax: 214-855-6808

                                                                  -and-

                                                      Bernard Marcus
                                                       marcus@marcus-shapira.com
                                                      Scott Livingston
                                                       livingston@marcus-shapira.com

DEFENDANT GIANT EAGLE, INC.’S REPLY IN SUPPORT OF ITS MOTION TO DISMISS FOR COLLATERAL
ESTOPPEL OR, IN THE ALTERNATIVE, PURSUANT TO THE GOVERNING FORUM SELECTION CLAUSE             Page 9
A0946626.9/248593.docx


                                                                                                R294
                                                     Jonathan Marcus
                                                       jmarcus@marcus-shapira.com
                                                     MARCUS & SHAPIRA LLP
                                                     301 Grant Street, 35th Floor
                                                     One Oxford Centre
                                                     Pittsburgh, Pennsylvania 15219-6401
                                                     Telephone: 412-338-5200
                                                     Fax: 412-391-8758

                                                     Attorneys for Giant Eagle, Inc., David
                                                     Shapira, and Daniel Shapira



                                 CERTIFICATE OF SERVICE

       The undersigned certifies that a copy of the foregoing instrument was served upon the
attorneys of record in the above cause via electronic filing and certified mail return receipt
requested, in accordance with Rule 21a, Texas Rules of Civil Procedure, on August 19, 2015.


                                                 /s/ Orrin L. Harrison III
                                              Orrin L. Harrison III




DEFENDANT GIANT EAGLE, INC.’S REPLY IN SUPPORT OF ITS MOTION TO DISMISS FOR COLLATERAL
ESTOPPEL OR, IN THE ALTERNATIVE, PURSUANT TO THE GOVERNING FORUM SELECTION CLAUSE        Page 10
A0946626.9/248593.docx


                                                                                              R295
                                           Exhibit 1




Defendant Giant Eagle's Reply in Support of Its Motion to Dismiss     Page 11




                                                                    R296
Excentus Corp. v. Giant Eagle, Inc., Slip Copy (2014)
2014 WL 923520


                                                                   On December 2, 2013, Giant Eagle filed a motion for
                  2014 WL 923520
                                                                   reconsideration of the court's decision denying its motion for
    Only the Westlaw citation is currently available.
                                                                   leave to amend and a brief in support of the motion. (ECF Nos.
             United States District Court,
                                                                   129, 130.)On December 3, 2013, Excentus filed a response in
                 W.D. Pennsylvania.
                                                                   opposition to Giant Eagle's motion for reconsideration, and
         EXCENTUS CORPORATION, Plaintiff,                          a brief in support of the response. (ECF Nos. 131, 132.)On
                        v.                                         December 12, 2013, the court issued a memorandum opinion
          GIANT EAGLE, INC., David Shapira,                        and order granting Giant Eagle's motion for reconsideration.
                                                                   The court reasoned that its decision denying Giant Eagle's
               Daniel Shapira, Defendants.
                                                                   motion for leave to amend required reconsideration to
                    Civil Action No. 13–178.                       “correct a clear error of law” in light of the Supreme Court's
                |     Signed March 10, 2014.                       decision in Atlantic Marine Construction Company, Inc. v.
                                                                   United States District Court for the Western District of Texas,
Attorneys and Law Firms                                            ––– U.S. ––––, 134 S.Ct. 568, 187 L.Ed.2d 487 (2013);
                                                                   Waye v. First Citizen's Nat'l Bank, 846 F.Supp. 310, 313–
Jeremy A. Mercer, Fulbright & Jaworski LLP, Canonsburg,            14 (M.D.Pa.1994), aff'd, 31 F.3d 1175 (3d Cir.1994) (motion
PA, Brett C. Govett, Gita Srivastava, Karl G. Dial, Michael B.     to reconsider “must rely on at least one of three grounds: 1)
Regitz, Fulbright & Jaworski L.L.P. Dallas, TX, for Plaintiff.     an intervening change in controlling law, 2) the availability
                                                                   of new evidence not previously available, or 3) the need to
Mark A. Willard, Eckert, Seamans, Cherin & Mellott,
                                                                   correct a clear error of law or prevent manifest injustice.”). In
Bernard D. Marcus, Jonathan D. Marcus, Scott D. Livingston,
                                                                   denying Giant Eagle's motion for leave to amend, the court
Marcus & Shapira, Pittsburgh, PA, for Defendants.
                                                                   held granting Giant Eagle leave to amend would be futile
                                                                   under Federal Rule of Civil Procedure 12(b)(3) because this
                                                                   court is not the proper forum for Giant Eagle's proposed
                          OPINION                                  counterclaim. In the memorandum opinion granting Giant
                                                                   Eagle reconsideration of that decision, the court recognized
JOY FLOWERS CONTI, Chief Judge.
                                                                   that under Atlantic Marine, a forum selection clause does
I. Introduction                                                    not render an otherwise proper venue improper. The Court in
 *1 On November 26, 2013, the court denied the Motion              Atlantic Marine held:
for Leave to File Answer to Plaintiff's Amended Complaint
                                                                     Section 1404(a) and Rule 12(b)(3) allow dismissal only
and Amended Counterclaims (the “motion for leave to
                                                                     when venue is “wrong or improper.” Whether venue is
amend”) (EC F No. 106) filed by defendant and counterclaim
                                                                     “wrong” or “improper” depends exclusively on whether
plaintiff Giant Eagle, Inc. (“Giant Eagle”). (ECF Nos. 125,
                                                                     the court in which the case was brought satisfies the
126.)In the motion for leave to amend, Giant Eagle sought
                                                                     requirements of federal venue laws, and those provisions
leave of court to add a declaratory judgment action to its
                                                                     say nothing about a forum-selection clause.
counterclaims seeking a declaration that, pursuant to stock
purchase agreements entered into between Giant Eagle and
plaintiff Excentus Corporation (“Excentus”), Excentus is
required to obtain Giant Eagle's consent prior to exercising its                                  ...
option under a stock repurchase agreement between Excentus
and Alliance Data Systems, Inc. (“ADS”). At a hearing on              *2 Whether the parties entered into a contract containing
November 25, 2013, the court determined that permitting              a forum-selection clause has no bearing on whether a case
Giant Eagle leave to amend would be futile because this              falls into one of the categories of cases listed in § 1391(b).
court was not the proper forum for Giant Eagle's declaratory         As a result, a case filed in a district that falls within § 1391
judgment action pursuant to the forum selection clause               may not be dismissed under § 1406(a) or Rule 12(b)(3).
contained in the stock purchase agreements. On November              Atlantic Marine, 134 S.Ct. at 577. The court in this case
26, 2013, the court issued an opinion and order denying Giant        reasoned that because there was no dispute that this court
Eagle's motion for leave to amend. (ECF Nos. 125, 126.)              is a proper venue for Giant Eagle's proposed counterclaim



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Excentus Corp. v. Giant Eagle, Inc., Slip Copy (2014)
2014 WL 923520

   under 28 U.S.C. § 1391, the court erred under Atlantic
   Marine when it denied Giant Eagle's motion for leave             • Counterclaim XII–Declaratory Judgment Regarding
   to amend based upon this court being the “wrong” or                Excentus' Breach of Section 5.02 of the stock purchase
   “improper” forum for the counterclaim. The court granted           agreements
   Giant Eagle's motion for reconsideration on that basis.
                                                                  (ECF No. 145.) The foregoing counterclaims are
The court noted, however, that Excentus was not without
                                                                  counterclaims asserted by Giant Eagle that arise from the
redress to enforce an otherwise valid forum selection clause
                                                                  stock purchase agreements entered into by the parties. (Id.)
entered into by the parties. As the Supreme Court held,
                                                                  On January 21, 2014, Giant Eagle filed a response in
“a forum-selection clause may be enforced by a motion to
                                                                  opposition to Excentus' motion to sever and transfer and a
transfer under § 1404(a).”Atlantic Marine, 134 S.Ct. at 575.
                                                                  brief in support of the response. (ECF Nos. 161.)On February
Section 1404(a) provides:
                                                                  21, 2014, Excentus with leave of court filed an unopposed
            (a) For the convenience of parties and                motion for leave to file a reply brief to its motion to sever and
            witnesses, in the interest of justice, a              transfer and attached the proposed reply brief to the motion.
            district court may transfer any civil                 (ECF No. 164.) On February 18, 2014, Giant Eagle with leave
            action to any other district or division              of court filed a surreply brief to Excentus' motion to sever and
            where it might have been brought or                   transfer. (ECF No. 172.)
            to any district or division to which all
            parties have consented.                                *3 In its motion to sever and transfer, Excentus argues
                                                                  the six counterclaims listed above should be transferred to
28 U.S.C. § 1404(a). The Supreme Court instructed that            the United States District Court of the Northern District of
“[w]hen a defendant files [a motion to transfer venue             Texas, Dallas Division U.S.C. § 1404(a). In the alternative,
to enforce a forum selection clause] ... a district court         Excentus argues the court should dismiss those counterclaims
should transfer the case unless extraordinary circumstances       for failing to state a claim upon which relief cam be
unrelated to the convenience of the parties clearly disfavor a    granted, pursuant to Federal Rule of Civil Procedure 12(b)
transfer.”Atlantic Marine, 134 S.Ct. at 575.                      (6). According to Excentus, the Court in Atlantic Marine did
                                                                  not address or preclude the possibility that a forum selection
On January 2, 2014, Excentus filed a motion to sever and          clause may be enforced by a party filing a motion to dismiss
transfer Giant Eagle's counterclaims and brief in support of      under Rule 12(b)(6).
the motion. (ECF Nos. 147, 148.)Excentus' motion to sever
and transfer is not limited to the proposed counterclaim in       In its responsive submissions, Giant Eagle argues: Texas
issue in the motion for leave to amend; Excentus requests         law controls the dispute between the parties and requires
the following counterclaims be severed and transferred to the     the counterclaims in this case to be tried in the Western
United States District Court of the Northern District of Texas,   District of Pennsylvania; 28 U.S.C. § 1404(a) does not apply
Dallas Division:                                                  to counterclaims; Federal Rule of Civil Procedure 21 with
                                                                  respect to severance weighs heavily against severance in this
  •Counterclaim VI–Breach of Section 8.07 of the stock            case; and the counterclaims in issue cannot be dismissed for
    purchase agreements                                           failure to state a claim upon which relief can be granted. (ECF
                                                                  No. 161.)
  • Counterclaim VII–Recovery of Attorney's Fees Under
    Texas Code
                                                                  The parties' arguments will be addressed below.
  • Counterclaim VIII–Breach of Section 7.01 of the stock
    purchase agreements
                                                                  II. Discussion
  • Counterclaim IX–Breach of Section 5.07 of the stock
                                                                  A. The Forum Selection Clause
    purchase agreements
                                                                  The forum selection clause in the stock purchase agreements
  • Counterclaim X–Breach of Section 3.09 of the stock            provides:
    purchase agreements; and
                                                                    VENUE FOR ANY ACTION ARISING OUT OF THIS
                                                                    AGREEMENT SHALL RESIDE EXCLUSIVELY IN


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 Defendant Giant Eagle's Reply in Support of Its Motion to Dismiss                                                            Page 13
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Excentus Corp. v. Giant Eagle, Inc., Slip Copy (2014)
2014 WL 923520

  THE COUNTY IN WHICH THE RESPONDENT'S
  PRINCIPAL OFFICES ARE LOCATED.                                    *4 Jonathan H, 562 F.3d at 529. With respect to the common
                                                                   meaning of the word “action,” the court of appeals prior to
(ECF No. 28 at 51.) This court previously held that permissive     analyzing the statutory language of the IDEA noted:
and compulsory counterclaims may be subject to forum
selection clauses, and under Jonathan H. v. The Souderton            The word “action,” without more, is arguably broad enough
Area School District, 562 F.3d 527, 529–30 (3d Cir.2009), a          to encompass any type of judicial proceeding, including
decision cited by Giant Eagle, the phrase “any action arising”       counterclaims. See United States v. P.F. Collier & Son
was broad enough under the common meaning of the word                Corp., 208 F.2d 936, 938 (7th Cir.1953) (“If the question
“action” to encompass the filing of a counterclaim. (ECF No.         were one of first impression, we would have no difficulty
125 at 5–7.) Giant Eagle does not reargue the first point, i.e.,     in reaching the conclusion that the words ‘any action, suit
that permissive and compulsory counterclaims may be subject          or proceeding’ are sufficiently broad in their ordinary and
to forum selection clauses; instead, Giant Eagle reargues that       commonly accepted meaning to encompass every form and
“any action arising” means the filing of an entire lawsuit, and      kind of litigation.”); see also Black's Law Dictionary 28–29
not the filing of counterclaims.                                     (7th ed.1999) (defining an “action” as, inter alia, “[a] civil
                                                                     or criminal judicial proceeding”). Cf. U.C.C. § 1–201(1)
At the hearing on November 25, 2013, Giant Eagle argued              (“ ‘Action’ in the sense of a judicial proceeding, includes
that under Jonathan H, a decision by the Third Circuit Court         recoupment, counterclaim, set-off, suit in equity, and any
of Appeals, “a Defendant or a respondent does not bring              other proceeding in which rights are determined.”).
an action by asserting a counterclaim;” instead, an “action”
                                                                   Id.The court based upon the foregoing, determined that based
means the entirety of a lawsuit. (H.T. 11/25/13 (ECF No.
                                                                   upon the common meaning of the word “action,” the phrase
127) at 13–14.) The court noted, however, that the issue in
                                                                   “any action arising” is broad enough to include the filing of
Jonathan H was the meaning of the phrase “bring an action”
                                                                   a counterclaim.
under the Individuals with Disabilities Education Act, 20
U.S.C. § 1400 et seq. (the “IDEA”), rather than the common
                                                                   Giant Eagle in its response to Excentus' motion to sever and
meaning of “an action.” (Id. at 17, 21 .)The court in Jonathan
                                                                   transfer argues that under Texas law, which is applicable in
H explained:
                                                                   this case, “any action arising” means the initiation of the
  The phrase “bring an action” is defined as “to sue;              lawsuit. Giant Eagle sets forth three reasons to support this
  institute legal proceedings.” Black's Law Dictionary (8th        argument. First, Giant Eagle argues that the district court
  ed.2004). Therefore, an action is “brought” when a plaintiff     for the Northern District of Texas “already interpreted the
  files a complaint, which is the first step that invokes          forum selection clause ... as a provision intended solely to
  the judicial process. SeeFed.R.Civ.P. 3 (“A civil action         discourage the initiation of a lawsuit.”(ECF No. 161 at 4
  is commenced by filing a complaint with the court.”);            (citing Excentus Corp. v. Giant Eagle, Inc., Civ. Action No.
  id.Advisory Committee Note (“The first step in an action is      11–3331, 2012 WL 2525594 (N.D.Tex. July 2, 2012).) Giant
  the filing of the complaint.”). Unlike the proactive nature      Eagle cites the following passage from the court's decision in
  of a complaint, a counterclaim is reactive because it is filed   support of its argument:
  only after the plaintiff has initiated the case by bringing
                                                                     [T]he Court finds that it is neither unfair nor unreasonable
  a civil action. Indeed, a counterclaim is a “claim for
                                                                     to require the party initiating litigation to sue in the
  relief asserted against an opposing party after an original
                                                                     county of the respondent, as agreed to by the parties,
  claim has been made.”Black's Law Dictionary 353 (8th
                                                                     which evidences the parties' apparent desire to discourage
  ed.2004); see also 3 James Wm. Moore, et al., Moore's
                                                                     litigation. See Abbott Labs. v. Takeda Pharm. Co., 476
  Federal Practice § 13.90(2)(a), at 13–79 (3d ed. 1997)
                                                                     F.3d 421, 422 (7th Cir.2007) (“The purpose of specifying
  (“Only defending parties may assert counterclaims.”).
                                                                     two forums in this way is to discourage either side from
  Counterclaims are therefore “generally asserted in the
                                                                     instituting litigation, because whoever sues must litigate on
  answer” to a previously filed complaint. Moore, supra, §
                                                                     the other party's turf.”)
  13.92, at 13–88.
                                                                   Id. at * 3. The issue before this court, i.e., the meaning of the
                                                                   phrase “any action arising” was not before the court in the
                                                                   Northern District of Texas; indeed, Excentus in that case did


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Excentus Corp. v. Giant Eagle, Inc., Slip Copy (2014)
2014 WL 923520

not argue the forum selection clause was unenforceable. Id.                       to be delivered ... a Shareholders
(“Excentus does not argue that any of the foregoing factors                       Agreement in the form attached hereto
render the forum clauses unreasonable, focusing instead on its                    as Exhibit E (the “Shareholders
contention that the forum selection clauses are inapplicable to                   Agreement” and together with the
its claims.”). Excentus argued the forum selection clause was                     Registration Rights Agreement, the
inapplicable to its claims. Id. Under those circumstances, the                    “Related Agreements”) executed by
foregoing passage addressed an issue different from the issue                     the Company and each Person (as
before the court in this case.                                                    defined below) who owns in excess
                                                                                  of 5% of the issued and outstanding
 *5 Giant Eagle argues this court-“as a matter of judicial                        Common Stock (as defined below) on
comity”—should follow the court's decision in the Texas                           a fully-diluted basis as of the Closing
case. Giant Eagle cites Hayman Cash Register Co. v. Sarokin,                      Date[.]
669 F.2d 162 (3d Cir.1982), in support of its judicial comity
argument. In that decision, the court noted: “ ‘[J]udges of          (Id. at 28–29) (emphasis in original.) Section 8.12 of the stock
co-ordinate jurisdiction sitting in the same court and in            purchase agreements provides:
the same case should not overrule the decisions of each
                                                                       Entire Agreement.This Agreement together with the
other.’”Hayman, 669 F.2d at 168–69 (quoting TCF Film
                                                                       Schedules and Exhibits attached hereto, shall constitute
Corp. v. Gourley, 240 F.2d 711, 713 (3d Cir.1957)). The court
                                                                       the entire agreement between the Parties with respect
held that this rule “should similarly apply to the propriety of
                                                                       to the transactions contemplated hereby and shall
transfer orders between two courts” because “[a] disappointed
                                                                       superseded all prior or contemporaneous negotiations,
litigant should not be given a second opportunity to litigate a
                                                                       understandings and agreements with respect thereto.
matter that has been fully considered by a court of coordinate
                                                                       There are no representations, agreements, arrangement,
jurisdiction, absent unusual circumstances.”Hayman, 669
                                                                       or understandings, oral or written, between or among the
F.2d at 169. As noted, the matter before this court was not
                                                                       Parties relating to the subject matter of this Agreement that
litigated before the district court in Texas. This court is not,
                                                                       are not fully expressed herein.
therefore, bound by dictum from the district court in Texas,
which, in any event, does not squarely address whether “any           *6 (Id. at 51.)Section 11.07 of the shareholders agreement,
action arising” includes a counterclaim filed by a defendant.        in pertinent part, provides:
In any event, Giant Eagle will not be precluded from raising
any valid defense in this case based upon the provisions of the        VENUE   FOR   ANY   ACTION    BROUGHT
stock purchase agreements. This court will coordinate with             HEREUNDER     SHALL      BE    PROPER
the district court in the Northern District of Texas to facilitate     EXCLUSIVELY1 IN THE COUNTY IN WHICH
a fair and prompt resolution of the disputes in both cases.            THE RESPONDENT'S PRINCIPAL OFFICES ARE
                                                                       LOCATED.
Giant Eagle's second reason the court should hold “any
action arising” means the initiation of a lawsuit and not            (ECF No. 162 at 15.) Giant Eagle argues that under
a counterclaim is that “Section 11.07 of the Shareholders            Personal Security & Safety Systems Inc. v. Motorola Inc.,
                                                                     297 F.3d 388, 395 (5th Cir.2002), this court must consider
Agreements provides, in pertinent part, ‘[v]enue for any
                                                                     the meaning of the word “action” in Section 11.07 of the
action brought hereunder shall be proper exclusively in
                                                                     shareholders agreement when deciding the meaning of “any
the county in which the respondent's principal offices are
                                                                     action arising” in the forum selection clause of the stock
located.”(ECF No. 161 at 6 (quoting ECF No. 162 at 15–16))
                                                                     purchase agreements. (ECF No. 161 at 6.)
(emphasis in (ECF No. 161).) Exhibit E to the stock purchase
agreements is a “Form of Shareholders Agreement.” (ECF
                                                                     In Personal Security, the parties executed three agreements
No. 28 at 55.) Section 2.01 of the stock purchase agreements
                                                                     in connection with the defendant making an investment in the
provides that at
                                                                     plaintiff company: “a Stock Purchase Agreement, a Product
             [t]he closing of the transactions                       Development and License Agreement, and a Shareholders
             contemplated by this Agreement ...                      Agreement.”Personal Sec., 297 F.3d at 390. The court noted
             the Parties shall deliver or cause                      that “[e]ach of these agreements played a particular role in
                                                                     the overall transaction.”Id. The Producet Development and


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 Defendant Giant Eagle's Reply in Support of Its Motion to Dismiss                                                              Page 15
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Excentus Corp. v. Giant Eagle, Inc., Slip Copy (2014)
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License Agreement (the “licensing agreement”) contained             all of them, if possible.”). Given our conclusion that
an arbitration clause; the stock purchase agreement did not.        the arbitration provision in the Product Development
Id. The plaintiff sued the defendant for breach of the stock        Agreement applies to all claims related to the overall
purchase agreement. In response, the defendant filed a motion       transaction, we must therefore interpret the forum selection
to compel arbitration. Id. The plaintiff argued the arbitration     provision in the Stock Purchase Agreement in a manner
provisions of the licensing agreement were not applicable           that is consistent with the arbitration provision.
to its claims because its claims arose solely under the stock
purchase agreement. Id. The court agreed with the defendant          *7 Reading the two provisions together, it becomes
and held: “the licensing agreement's arbitration provision          clear that the forum selection clause does not require the
governs claims arising out of the stock purchase agreement          parties to litigate all claims in Texas courts, nor does it
because the agreements were executed together as part of the        expressly forbid arbitration of claims arising under the
same overall transaction and therefore are properly construed       Stock Purchase Agreement. Instead, we interpret the forum
together.”Personal Sec., 297 F.3d at 390.                           selection clause to mean that the parties must litigate in
                                                                    Texas courts only those disputes that are not subject to
The plaintiff in Personal Security argued that the court's          arbitration-for example, a suit to challenge the validity
interpretation of the arbitration provision of the licensing        or application of the arbitration clause or an action to
agreement was contrary to the the forum selection clause in         enforce an arbitration award. Rather than covering all
the stock purchase agreement. The forum selection clause            “disputes” or all “claims” like the arbitration provision in
provided:                                                           the Product Development Agreement, the forum selection
                                                                    clause confers “exclusive jurisdiction” on Texas courts
            Governing Law. THIS AGREEMENT                           only with respect to “any suit or proceeding.” This
            SHALL BE GOVERNED BY AND                                limitation suggests that the parties intended the clause to
            CONSTRUED IN ACCORDANCE                                 apply only in the event of a non-arbitrable dispute that must
            WITH       THE     LAWS    OF                           be litigated in court.
            THE     STATE      OF   TEXAS.
            ANY SUIT OR PROCEEDING                                Id. at 395–96.
            BROUGHT HEREUNDER SHALL
            BE SUBJECT TO THE EXCLUSIVE                           Giant Eagle argues that under Personal Security, this court
            JURISDICTION OF THE COURTS                            should consider the meaning of “action” in the forum
            LOCATED IN TEXAS.                                     selection clause in the shareholders agreement when deciding
                                                                  the meaning of “any action arising” in the forum selection
Personal Sec., 297 F.3d at 395. Plaintiff argued based upon       clause in the stock purchase agreement. In other words,
this provision that the parties “expressly excluded the use of    Giant Eagle argues that because “any action brought” means
arbitration to resolve ... any dispute arising out of the Stock   the initiation of a lawsuit, and the forum selection clause
Purchase Agreement[, which] must be litigated in Texas            in the shareholders agreement uses the phrase “any action
courts.”Id. The court rejected plaintiff's argument, reasoning:   brought,” the phrase “any action arising” used in the forum
                                                                  selection clause in the stock purchase agreements also means
  Standing alone, one could plausibly read the forum              the initiation of a lawsuit. Personal Security, however, is
  selection clause to mean that Texas courts have the             distinguishable from this case. The court in Personal Security
  exclusive power to resolve all disputes arising under the       held:
  Stock Purchase Agreement. But the forum selection clause
  does not stand alone. To the contrary, we must interpret          [I]n the absence of a contrary expression of intent in the
  the forum selection clause in the context of the entire           Stock Purchase Agreement, the arbitration provision in
  contractual arrangement and we must give effect to all of         the Product Development Agreement covers all disputes
  the terms of that arrangement. See Richland Plantation            related to the subject matter of the entire transaction
  Co. v. Justiss–Mears Oil Co., Inc., 671 F.2d 154, 156             between PSSI and Motorola. Because we cannot say
  (5th Cir.1982) (“When several documents represent one             “with positive assurance that [the] arbitration clause is
  agreement, all must be construed together in an attempt           not susceptible of an interpretation which would cover the
  to discern the intent of the parties, reconciling apparently      dispute at issue,” we find that it applies to PSSI's claims
  conflicting provisions and attempting to give effect to           under the Stock Purchase Agreement.



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                                                                    N.A. v. David Orlando Collins, Civ. Action 09–2483, 2010
Personal Sec., 297 F.3d at 394–95.                                  WL 3303663, at *2 (S.D.Tex. Aug.19, 2010), “[s]tatutory
                                                                    interpretation is a much different undertaking than contract
Here, an arbitration agreement is not in issue; the court,          interpretation, especially when the contract conveys rights
therefore, does not need to consider the “ ‘liberal policy          and privileges negotiated between the parties.”The court
favoring arbitration’ ” and a “ ‘strong federal policy in favor     explained:
of enforcing arbitration agreements.’ “ Id. at 392 (quoting
Texaco Exploration and Prod. Co. v. AmClyde Engineered                The basic rules of contract interpretation require the court
Prods. Co., Inc., 243 F.3d 906, 909 (5th Cir.2001)). Secondly,        “to ascertain the true intentions of the parties as expressed
because the parties chose to use different phrases in the forum       in the instrument.”Ace Cash Express, Inc. v. Silverman,
selection clauses in their agreements, i.e., “any action arising”     No. 03–03–00205–CV, 2004 WL 101684, at *3 (Tex.App.-
and “any action brought,” they have shown a “contrary                 Austin Jan.23, 2004) (citing Coker v. Coker, 650 S.W.2d
expression of intent” that those phrases do not mean the same         391, 393 (Tex.1983)). The primary goal in interpreting a
thing. As Giant Eagle argues, “any action brought” means              contract is to give effect to the meaning of the contract
the initiation of a lawsuit, and, as the court previously held,       as drafted, not as the parties intended it to be drafted.
“any action arising” includes the filing of a counterclaim. The       Id. at *3 (citing First State Bank v. Keilman, 851 S.W.2d
shareholders agreement in this case shows that the parties            914, 922 (Tex.App.-Austin 1993, writ denied)).“Where the
knew how to limit the application of a forum selection clause         language of a [contract] is unambiguous, and its meaning
to the initiation of a lawsuit by using the phrase “any action        is clear, the [contract] must be given effect according
brought.” The parties chose not to use that language with             to its terms.”Bd. of Ins. Comm'rs, 180 S.W.2d at 909.
respect to the stock purchase agreements. This situation is           Normally, the language of the contract will be given
unlike in Personal Security where the allegedly “contrary”            its “plain grammatical meaning,” unless doing so would
provision was not an anti-arbitration provision; it was a             result in a departure from the obvious intentions of the
forum selection clause. Here, there are two forum selection           parties, ambiguity in its meaning, or an absurdity. Ace
clauses that do not provide for the same outcome. Plaintiff's         Cash Express, 2004 WL 101684, at *3–4 (citing Lyons v.
argument urges the court to ignore the actual terms used              Montgomery, 701 S.W.2d 641, 643 (Tex.1985)).
by the parties. This argument runs contrary to principles
of contract interpretation to “give meaning to each of the          Wells Fargo, 2010 WL 3303663, at * 2. These rules
agreement's terms.” Dallas Gas Partners, L.P. v. Prospect           contemplate the court ascertaining the “common meaning”
Energy Corp., 733 F.3d 148, 157 (5th Cir.2013) (citing Two          of the words used in a contract by the parties. Id. T he
Guys from Harrison–N .Y., Inc. v. S.F.R. Realty Assocs., 63         parties did not point to any decisions from the Texas courts or
N.Y.2d 396, 482 N.Y.S.2d 465, 472 N.E.2d 315 (N.Y.1984)             federal courts within the Fifth Circuit addressing the common
(“In construing a contract, one of a court's goals is to            meaning of the word “action.” Under those circumstances,
avoid an interpretation that would leave contractual clauses        the court finds the analysis of the common meaning of
meaningless.)). Based upon the foregoing, Personal Security         the word “action” by Third Circuit Court of Appeals in
is distinguishable from this case, and not a ground to deny         Jonathan H persuasive. Although the ultimate issue decided
Excentus' motion to sever and transfer.                             in that case was a matter of statutory interpretation, the
                                                                    court addressed the common meaning of the word “action”
 *8 Giant Eagle's third argument is that under Texas law,           prior to its statutory analysis. The Third Circuit Court of
the word “action” means the entirety of a civil proceeding,         Appeals recognized that the word “action” is broad enough to
and, under those circumstances, “any action arising” means          encompass a counterclaim.
the same as “any action brought.” (ECF No. 161 at 7.)
The decisions cited by Giant Eagle in support of this               The Fifth Circuit Court of Appeals has recognized that “[o]ne
argument, however, interpreted the word “action” in statutes.       of the fundamental tenets of contract interpretation is that
See TLI, Inc. v. United States, 100 F.3d 424, 427 (5th              contracts should be read as a whole, viewing particular
Cir.1996) (interpreting 11 U.S.C. § 108); Nolan v. Boeing           language in the context in which it appears.”Woolley v.
Co., 919 F.2d 11058, 1066 (5th Cir.1990) (interpreting 28           Clifford Chance Rogers & Wells, L.L.P., 51 F. App'x 930,
U.S.C. § 1441); Thomas v. Oldham, 895 S.W.2d 352, 356
(Tex.1995) (interpreting Tex. Civ. Prac. & Remedies Code            *9 * 1 (5th Cir.2002) (citing RESTATEMENT (SECOND)
Ann. § 101.106). As the court noted in Wells Fargo Bank,            OF CONTRACTS § 202 (1981)). In accord with that


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 Defendant Giant Eagle's Reply in Support of Its Motion to Dismiss                                                            Page 17
                                                                                                                            R302
Excentus Corp. v. Giant Eagle, Inc., Slip Copy (2014)
2014 WL 923520

principle, the meaning of “action” in this case may be             to attention.”Merriam–Webster's Online Dictionary, http://
ascertained by considering the context in which that word          www.merriamwebster.com/dictionary/arising (last visited on
is used in the agreements in issue. In the forum selection         March 7, 2014). Having concluded that the common
clause in the shareholders agreement, the pertinent phrase         meaning of the word “action” is broad enough to include
is “any action brought;” in the forum selection clause in          counterclaims, the court holds that “any action arising”
the stock purchase agreements, the pertinent phrase is “any        can mean any counterclaim originating from the stock
action arising.” The dictionary definitions of the words           purchase agreements.Giant Eagle's asserted legal rights in
“brought” and “arising” provide context that supports the          counterclaims VI, VII, VIII, IX, X, and XII originate from
court's distinction between the two forum selection clauses        the stock purchase agreement. The distinction between “any
in this case. The forum selection clause in the shareholders       action arising” and “any action brought” is supported by the
agreement provides:                                                dictionary definitions of “action” and “brought.”

  VENUE    FOR   ANY   ACTION   BROUGHT                             *10 Under those circumstances, and in light of the foregoing
  HEREUNDER SHALL BE PROPER EXCLUSIVELY                            discussion, the court is not persuaded by Giant Eagle's
  IN  THE    COUNTY    IN   WHICH   THE                            arguments with respect to the application of the forum
  RESPONDENT'S11 PRINCIPAL OFFICES ARE                             selection clause in this case. The counterclaims asserted by
  LOCATED.                                                         Giant Eagle arising from the stock purchase agreements, i.e.,
                                                                   counterclaims VI, VII, VIII, IX, X, and XII, are subject to the
(ECF No. 162 at 15) (emphasis added.) The forum selection
                                                                   forum selection clause in the stock purchase agreements.
clause in the stock purchase agreements provides:

  VENUE FOR ANY ACTION ARISING OUT OF THIS
                                                                   B. Severance under Federal Rule of Civil Procedure 21
  AGREEMENT SHALL RESIDE EXCLUSIVELY IN
                                                                   The court agrees with Giant Eagle that 28 U.S.C. § 1404(a)
  THE COUNTY IN WHICH THE RESPONDENT'S
                                                                   contemplates the transfer of an entire civil proceeding and not
  PRINCIPAL OFFICES ARE LOCATED.
                                                                   individual claims. Chrysler Credit Corp. v. Country Chrysler,
(ECF No. 28 at 51) (emphasis added.) The                           Inc., 928 F.2d 1509, 1518–19 (10th Cir.1991) (“Section
word “brought” is the past tense of “bring.”                       1404(a) only authorizes the transfer of an entire action, not
MerriamWebster's Online Dictionary, http://www.merriam-            individual claims.”); Wyndham Assocs. V. Bintliff, 398 F.2d
webster.com/dictionary/brought (last visited on March 7,           614, 618 (2d Cir.1968). The court may, however, sever
2014). The pertinent definition of “bring” is “to cause            transferable claims under Federal Rule of Civil Procedure
to exist or occur: as ... INSTITUTE <bring legal                   21, which would result in two separation actions, and then
action>.” Merriam–Webster's Online Dictionary, http://             transfer the severed action to the appropriate court.Wyndham,
www.merriamwebster.com/dictionary/bring (last visited on           398 F.2d at 618 (“Where certain claims are properly severed,
March 7, 2014). This definition comports with the Third            the result is that there are then two or more separate ‘actions,’
Circuit Court of Appeals' statutory interpretation of “any         and the district court may, pursuant to § 1404(a), transfer
action brought” in Jonathan H, which was adopted by federal        certain of such separate actions while retaining jurisdiction of
courts in Texas. Jonathan H, 562 F.3d at 529;see e.g., Ruben       others.”)
A. v. El Paso Indep. Sch. Dist., 414 F. App'x 704, 706–
07 (5th Cir.2011); UNC Lear Servs., Inc. v. Kingdrom of            In In re Nintendo Co., Ltd., Misc. No. 151, 2013 WL 5345899
Saudi Arabia, 720 F.Supp.2d 800, 804 (W.D.Tex.2010). In            (Fed.Cir. Sept.25, 2013), the court noted:
Jonathan H, the court determined that “an action is “brought”
                                                                     Rule 21 provides that, “the court may at any time, on just
when a plaintiff files a complaint, which is the first step that
                                                                     terms, add or drop a party. The court may also sever any
invokes the judicial process.”Jonathan H, 562 F.3d at 529.
                                                                     claim against a party.”The decision to deny a motion to
The common meaning of the word “brought” supports this
                                                                     sever is committed to the discretion of the district court.
interpretation; indeed, the parties do not dispute the meaning
                                                                     In re EMC Corp. ., 677 F.3d 1351, 1355 (Fed.Cir.2012).
of “any action brought” in this case.
                                                                     This discretion is not unbridled, however; it “must be
                                                                     exercised within the boundaries set by relevant statutes and
The pertinent definitions of the word “arising” are: (1) “to
                                                                     precedent,” and a “district court abuses its discretion if it
originate from a source;” and (2) “to come into being or
                                                                     relies on an erroneous conclusion of law.”Id. This court


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 Defendant Giant Eagle's Reply in Support of Its Motion to Dismiss                                                             Page 18
                                                                                                                             R303
Excentus Corp. v. Giant Eagle, Inc., Slip Copy (2014)
2014 WL 923520

                                                                        *11 Based upon the foregoing, severance of counterclaims
  generally applies Federal Circuit law, rather than regional
  circuit law, to the issue of severance. Id. at 1354.We may,          arising under the stock purchase agreements, i.e.,
  however, look to the decisions of our sister circuits for            counterclaims VI, VII, VIII, IX, X, and XII, will be severed
  guidance. See id.                                                    from Excentus' claims and Giant Eagle's other counterclaims
                                                                       that do not arise under the stock purchase agreements.
In re Nintendo Co., Ltd., Misc. No. 151, 2013 WL 5345899,
at *6 (Fed.Cir. Sept.25, 2013).“A district court has broad
discretion to order the severance of particular claims and             III. Conclusion
                                                                       For the reasons stated herein, the motion to sever and
afford them separate treatment when doing so advances the
                                                                       transfer (ECF No. 147) filed by Excentus will be GRANTED.
administration of justice and no party suffers prejudice by
                                                                       Pursuant to the forum selection clause in the stock purchase
virtue of the severance.”El Aguila Food Prods., Inc. v. Gruma
                                                                       agreements, the standalone civil proceeding created by the
Corp., 167 F.Supp.2d 955, 959–60 (S.D.Tex.2001).
                                                                       court severing counterclaims VI, VII, VIII, IX, X, and XII
                                                                       from the other claims asserted in this case will be transferred
In accordance with the foregoing statement of the law,
                                                                       to the United States District Court of the Northern District of
it is appropriate for a court to sever claims subject to a
                                                                       Texas, Dallas Division.
valid forum selection clause. 1–Stop Fin. Serv. Ctrs. of
Am., LLC v. Astonish Results, LLC, Civ. Action No. 13–
                                                                       Within fourteen days of the entry of this opinion and
961, 2014 WL 279669, at *10 (W.D.Te Jan. 23, 2014)
                                                                       accompanying order, Giant Eagle must file counterclaims
(“The Court, through the above analysis, has determined
                                                                       VI, VII, VIII, IX, X, and XII as claims in a separate case
the two forum selection clauses are both valid and should
                                                                       in this district. The Clerk of Court will be directed not to
be enforced. Therefore, severance is appropriate.”). This
                                                                       charge a filing fee for that case. After the case is filed, this
conclusion is true even where a party opposing the severance
                                                                       court will enter an order to transfer those counterclaims to
argues-like Giant Eagle does in this case-that “severance
                                                                       the District Court of the Northern District of Texas, Dallas
would be a waste of judicial resources, and severance would
                                                                       Division. This court will coordinate with the transferee court
severely prejudice [them].”Id.The court will not “override”
                                                                       to minimize duplicative discovery, if any, and to facilitate a
the parties' agreement with respect to where certain claims
                                                                       prompt resolution of all claims and counterclaims between
should be tried.Id. (“Notwithstanding the fact these claims are
                                                                       Excentus and Giant Eagle in an efficient manner.
interrelated and separating them forces two different courts
to handle similar cases, this Court cannot override the parties'
                                                                       The motion to stay (ECF No. 160) with respect to Excentus'
contractual agreements.”). As the court noted in 1–Stop, “any
                                                                       motion to sever and transfer will be DENIED as moot.
inconvenience or prejudice imposed on [the party opposing
severance], or any other private interest factor, is not be
                                                                       An appropriate order will be entered.
considered in the § 1404(a) analysis given Atlantic Marine
[;]” indeed, as the court noted, a party opposing severance
“could have avoided this entire dilemma if it had read and
                                                                       All Citations
understood the contracts it signed.”Id.
                                                                       Slip Copy, 2014 WL 923520

End of Document                                                    © 2015 Thomson Reuters. No claim to original U.S. Government Works.




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                                        August 25, 2015

Via ECF and Hand Delivery
Honorable Martin Hoffman
George L. Allen, Sr. Courts Building
68th District Court
600 Commerce St., 5th Floor
Dallas, Texas 75202

       Re:     Cause No. DC-15-03853, In the 68th District Court, Dallas County, Dickson Perry
               v. Brandon Logsdon, et al.

Dear Judge Hoffman:

        Yesterday morning, we filed a 3-page supplemental brief clarifying how narrowly Texas
courts construe the terms “arising out of” (and addressing some new evidence). Such narrow
language stands in sharp contrast with broader terms, such as “related to” and, in particular, “in
connection with,” which the SP Agreements utilize when defining indemnification obligations,
see §§ 7.01 and 7.02, but not when defining venue. We refer the Court to the authority cited in
our brief.

        The Court also requested cases in which Texas courts construed the “arise out of” or
similar language to exclude the particular claims at issue. I have attached highlighted copies of
the following cases: Busse v. Pac. Cattle Feeding Fund No. 1, Ltd., 896 S.W.2d 807, 812 (Tex.
App.—Texarkana 1995, writ denied) (in forum selection case, construing “arising hereto” to
exclude tort claims where “[t]he rights, obligations, and cause of action do not arise from the
contracts but from the Deceptive Trade Practices Act, the Texas Securities Act, and the common
law”); Major Help Ctr., Inc. v. Ivy, Crews & Elliott, P.C., 03-99-00285-CV, 2000 WL 298282, at
*2 (Tex. App.—Austin Mar. 23, 2000, no pet.) (in forum-selection case, construing “[a]ny action
brought by either party under this agreement” to exclude tort claims that “do not rely on the
terms of the Agreement as the[ir] basis” and plaintiffs “do not attempt to enforce duties or
obligations arising under the Agreement”); Osornia v. AmeriMex Motor & Controls, Inc., 367
S.W.3d 707, 712 (Tex. App.—Houston [14th Dist.] 2012, no pet.) (in arbitration case, construing
“any and all claims arising out of this Agreement” narrowly due to absence of “relating to”
language); Associated Air Freight, Inc. v. Meek, 01-00-00843-CV, 2001 WL 225516, at *2 (Tex.
App.—Houston [1st Dist.] Mar. 8, 2001, no pet.) (in arbitration case, construing “a dispute
hereunder” to exclude claims where “allegations in this lawsuit touch only tangentially on the”
agreements at issue); In re Wilmer Cutler Pickering Hale & Dorr LLP, 05-08-01395-CV, 2008
WL 5413097, at *4 (Tex. App.—Dallas Dec. 31, 2008, no pet.) (in arbitration case, construing

                                                                                              R325
Honorable Martin Hoffman
August 25, 2015
Page 2


“any action instituted under this Agreement” to apply “only if the claimant is relying on the
terms and authority of the agreement as the basis for the rights sued upon”); In re Advance
Payroll Funding, Ltd., 254 S.W.3d 710, 713 (Tex. App.—Dallas 2008, no pet.) (in arbitration
case, construing “arising out of or relating to” to exclude claims that “arose from general
obligations imposed by law” and not from the agreement). Although some of these cases address
arbitration provisions, the Texas Supreme Court looks to such cases when interpreting the scope
of forum-selection clauses. See In re Int’l Profit Associates, Inc., 274 S.W.3d 672, 677 (Tex.
2009) (listing additional authority).

        The foregoing authority makes clear that “tangential” connections between the SP
Agreements and the claims in the case, see Meek, 2001 WL 225516, at *2, or agreements that
“merely created the conditions that led to” the parties dealing with each other, see In re Advance
Payroll Funding, Ltd., 254 S.W.3d at 714, do not suffice to bring the subject dispute within the
forum-selection provision. If the SP Agreements’ forum-selection clause included all disputes
“related to” the SP Agreements, or all disputes “in connection with” with the SP Agreements,
perhaps Giant Eagle’s belief that the SP Agreements may come into play as a possible partial
defense when discussing the litigation underlying the settlement transaction Mr. Perry attacks
would be (tenuously) relevant. But the SP Agreements’ forum-selection clause brings within its
scope only disputes “arising out of” the SP Agreements, which Texas courts have interpreted to
mean disputes that look to the subject agreement as the source of the obligations allegedly
breached. Here, Mr. Perry’s claims arise out of Defendants’ breaches of obligations imposed by
Texas common and statutory law, not by the SP Agreements, and his claims make no reference
to any of the rights or obligations in the SP Agreements.

        Lastly, during yesterday’s hearing, I argued that the settlement agreement to which Giant
Eagle is a party, and the execution of which Mr. Perry attacks here, belied Giant Eagle’s
contention that the parties expected disputes between Giant Eagle and Excentus to be litigated
only in Pittsburgh. To be clear, Mr. Perry does not seek arbitration. But I highlighted that
provision because (a) the settlement agreement identifies Dallas, Texas as the forum for disputes
related to it, thereby directly contradicting Giant Eagle’s contention that it negotiated and expects
Pittsburgh to be the forum in all disputes involving the parties; and (b) the settlement
agreement’s broad forum-selection provision Giant Eagle agreed to stands in sharp contrast to
the narrow provision Giant Eagle negotiated in the SP Agreements.

                                                      Respectfully,




                                                      Andrés Correa
AC/ks
02708-403/4830-6859-6263




                                                                                                 R326
Honorable Martin Hoffman
August 25, 2015
Page 3


cc:    Via Email
       Orrin L. Harrison III (oharrison@ghjhlaw.com)
       Bernard Marcus (marcus@marcus-shapira.com)
       Scott Livingston (livingston@marcus-shapira.com)
       Jonathan Marcus (jmarcus@marcus-shapira.com)
       Ken Carroll (kcarroll@ccsb.com)
       Byran Erman (berman@ccsb.com)
       Sara Romine (sromine@ccsb.com)
       Robert B. Wagstaff (rwagstaff@mcmahonlawtx.com)
       Lisa S. Gallerano (lgallerano@akingump.com)
       Patrick O’Brien (pobrien@akingump.com)




                                                          R327
Associated Air Freight, Inc. v. Meek, Not Reported in S.W.3d (2001)
2001 WL 225516




                                                    2001 WL 225516
                                     Only the Westlaw citation is currently available.

NOTICE: NOT DESIGNATED FOR PUBLICATION. UNDER TX R RAP RULE 47.7, UNPUBLISHED OPINIONS
   HAVE NO PRECEDENTIAL VALUE BUT MAY BE CITED WITH THE NOTATION “(not designated for
                                     publication).”

                                      Court of Appeals of Texas, Houston (1st Dist.).

                              ASSOCIATED AIR FREIGHT, INC., Appellant,
                                                     v.
           David MEEK, Nancy Meek, and Professional Logistics Management Company, Inc., Appellees.
                                 In re Associated Air Freight, Inc., Relator.

                               Nos. 01-00-00994-CV, 01-00-00843-CV. | March 8, 2001.


On Appeal from the 113th District Court, Harris County, Texas, Trial Court Cause No. 00-26273.

Panel consists of MIRABAL, TAFT and DUGGAN,4 JJ.




                                                OPINION ON REHEARING


TAFT.

*1 Relator, Associated Air Freight, Inc., has filed a motion for rehearing in Cause No. 01-00-843-CV. We deny rehearing,
but withdraw our opinion of January 25, 2001, and issue this opinion in its stead.

Cause No. 01-00-00994-CV is an attempted, interlocutory, accelerated appeal from an order denying motions by Associated
Air Freight, Inc. (Associated), appellant, which sought to enforce an arbitration clause, or, alternatively, to dismiss the cause
below under a forum-selection clause. Cause No. 01-00-00843-CV is an original proceeding in which Associated seeks
mandamus relief from this Court on similar grounds, and has moved to stay further proceedings in the trial court. We have
consolidated the causes to render a decision disposing of both simultaneously. See In re Valero Energy Corp., 968 S.W.2d
916, 916-17 (Tex.1998). We dismiss the interlocutory appeal, and deny mandamus relief, including Associated’s motion for
emergency relief.

These causes arise from a lawsuit filed by David Meek, Nancy Meek, and Professional Logistics Management Company, Inc.
(PLMC), who are appellees in Cause No. 01-00-994-CV, and real parties-in-interest in Cause No. 01-00-834-CV. The
Meeks’ and PLMC’s pleadings state that Associated is a foreign corporation doing business in Texas. The Meeks are Texas
residents, and PLMC is a Texas corporation. The Meeks and PLMC allege that Associated wrongfully terminated its sales-
agency agreement with PLMC, and executed a new sales-agency agreement with a different Texas corporation, Universal
Logistics, Inc. (ULI). The Meeks and PLMC claim Associated conspired with their former partners, Myra Hill, Ivy Dane
Mims, and David B. Rogers, who formed ULI in breach of duties owed the Meeks and PLMC, and that ULI is the alter ego
of Hill, Mims, and Rogers. Shortly after suit was filed, Associated sought to enforce an arbitration provision and a forum-
selection clause in its sales-agency agreement with PLMC.


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                                                                                                                       R328
Associated Air Freight, Inc. v. Meek, Not Reported in S.W.3d (2001)
2001 WL 225516




                                             Appeal-Cause No. 01-00-00994-CV


A. No Jurisdiction for Appeal of Denial of Arbitration under the FAA
Associated challenges the trial court’s failure to enforce an arbitration clause under Chapter 171 of the Civil Practice and
Remedies Code, which contains the General Arbitration Act (the Texas Act). In requesting relief from the trial court,
however, Associated relied on the Federal Arbitration Act, 9 U.S.C. § 1 (1994) (the FAA).1 While the FAA permits appeals
from interlocutory orders denying arbitration, federal procedure does not apply in Texas courts, even when we apply the
FAA. Jack B. Anglin Co. v. Tipps, 842 S.W.2d 266, 272 (Tex.1992); Belmont Constructors, Inc. v. Lyondell Petrochem. Co.,
896 S.W.2d 352, 355 (Tex.App.-Houston [1st Dist.] 1995, orig. proceeding). Texas procedure limits this Court’s appellate
jurisdiction to review of final orders and judgments, and interlocutory orders expressly authorized by statute. Anglin, 842
S.W.2d at 272. An order denying arbitration under the FAA is neither a final disposition, nor expressly authorized by section
171.098(a)(1)-(5) of the Civil Practice and Remedies Code, nor any other statutory exception. See Anglin, 842 S.W.2d at 272;
Stewart Title Guar. Co. v. Mack, 945 S.W.2d 330, 332 (Tex.App.-Houston [1st Dist.] 1997, writ dism’d w.o.j. [leave denied]
). Accordingly, we have no jurisdiction to address Associated’s complaint by appeal.



B. No Jurisdiction over Appeal of Interlocutory Refusal to Enforce Forum-Selection Clause
*2 Associated also challenges the trial court’s refusal to dismiss this cause based on a contractual forum-selection clause.
Here, again, the trial court’s order is not a final disposition of the case, but interlocutory, and none of the statutorily
authorized exceptions for interlocutory appeals applies. Accordingly, we lack jurisdiction to address Associated’s complaint
by appeal. SeeTEX.CIV.PRAC. & REM.CODE ANN. §§ 51.014, 171.098 (Vernon Supp.2001); Stewart Title, 945 S.W.2d at
332.

We dismiss the appeal in Cause No. 01-00-00994-CV.




                                           Mandamus-Cause No. 01-00-00843-CV


A. Associated’s Right to Arbitrate under the FAA
Mandamus may issue when a trial court violates a duty imposed by law, or clearly abuses its discretion, and the complaining
party has no adequate remedy by appeal. Walker v. Packer, 827 S.W.2d 833, 839-40 (Tex.1992). A party erroneously denied
its right to arbitration under the FAA has no adequate appellate remedy and is entitled to mandamus relief. EZ Pawn Corp. v.
Mancias, 934 S.W.2d 87, 88 (Tex.1996); Hou-Scape, Inc. v. Lloyd, 945 S.W.2d 202, 205 (Tex.App.-Houston [1st Dist.]
1997, orig. proceeding). We may not, however, disturb the trial court’s factual determinations on mandamus review.Mendoza
v. Eighth Court of Appeals, 917 S.W .2d 787, 789 (Tex.1996); see Walker, 827 S.W.2d at 840 (requiring deferential review
of trial court’s factual determinations unless the trial court “could reasonably have reached only one decision”). Likewise, we
may not “plumb” the trial court’s subjective reasoning; we must focus instead on the record before the trial court, and
whether, based on that record, the trial court’s decision was arbitrary and amounted “ ‘to a clear and prejudicial error of law.’
“ In re Bristol-Myers Squibb Co., 975 S.W.2d 601, 605 (Tex.1998) (quoting from Walker, 827 S.W.2d at 839, which quoted
from Johnson v. Fourth Court of Appeals, 700 S.W.2d 916, 917 (Tex.1985)). As with any request that mandamus issue, the
petitioner must establish a clear right to relief. ISK Biotech Corp. v. Lindsay, 933 S.W.2d 565, 568 (Tex.App.-Houston [1st
Dist .] 1996, orig. proceeding).




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                                                                                                                       R329
Associated Air Freight, Inc. v. Meek, Not Reported in S.W.3d (2001)
2001 WL 225516

1. Factual Background
Associated is a New York company engaged in the air-freight business. In 1999, Associated and PLMC executed an
agreement (the first agency agreement) by which PLMC became Associated’s sales agent within the 100-mile radius from
Associated’s Houston facility. David L. Meek signed the agreement on behalf of PLMC on July 21, 1999. In addition to other
terms, the agreement contained the following provision concerning arbitration:

            1. This Agreement shall be governed and construed in accordance with the laws of the State of New
            York applicable to agreements made to be performed entirely within such State. In the event of a
            dispute hereunder the parties hereto agree to submit same to arbitration before the American
            Arbitration Association, as follows: in the event of a claim by [PLMC] against Associated, it shall be
            made in the White Plains office of the AAA. In the event of a claim by Associated against [PLMC] it
            shall be made in the office of the AAA nearest to the Agent.

*3 On February 9, 2000, Associated signed a virtually identical agency sales agreement, which contained the same arbitration
clause (the second agency agreement), with ULI. Hill, Mims, and Rogers had signed the agreement two days before, on
behalf of ULI.

The Meeks claim they were partners with Hill, Mims, and Rogers in PLMC, and advanced over $100,000 to the partnership,
which the partnership agreed to repay and which allowed PLMC to become profitable in servicing Associated’s requirements
under the first agency agreement. The Meeks contend they were induced to assign additional stock to Hill, Mims, and Rogers
after they set up PLMC, which allowed Hill, Mims, and Rogers to become majority shareholders. The Meeks claim that, once
Hill, Mims, and Rogers became majority shareholders, they conspired with Associated: to defraud the Meeks of their
ownership interest in PLMC, in breach of fiduciary duties owed the Meeks and PLMC; to usurp PLMC’s corporate
opportunities; to self-deal; to effect the resignation of Hill, Mims, and Rogers from PLMC on February 5, 2000; to terminate
the first agency agreement with PLMC;2 and to allow ULI, an alter ego entity created by Hill, Mims, and Rogers, to assume
PLMC’s operations on February 6, 2000, to the exclusion of the Meeks. As addressed above, the Meeks and PLMC seek
legal and equitable remedies premised on partnership and corporate duties owed them, and damages, for return of over
$100,000 advanced to PLMC and not paid, as well as punitive damages.3Less than a month after suit was filed, Associated
sought to enforce the arbitration clause in the first agency agreement, and later invoked the arbitration clause in the second
agency agreement as well.



2. Interstate Commerce
The party seeking to compel arbitration under the FAA carries a two-pronged burden: (1) to establish its right to arbitrate
under the act; and (2) to establish that the opponent’s claims are within the scope of the arbitration clause. See Cantella & Co.
v. Goodwin, 924 S.W.2d 943, 944 (Tex.1996); Anglin, 842 S.W.2d at 269-70; Stewart Title, 945 S.W.2d at 333. Assuming,
arguendo, that the FAA applied to the dispute, Associated did not meet its burden to establish that the Meeks’ claims were
within the scope of the arbitration clause.



3. Scope of Arbitration Clause
When a party invokes a right to arbitration under the FAA, federal law determines whether the dispute is subject to
arbitration. See Prudential Securities, Inc. v. Marshall, 909 S.W.2d 896, 899 (Tex.1995). Federal policy strongly favors
arbitration and resolves all doubts concerning arbitrability in favor of arbitration. Moses H. Cone Mem. Hosp. v. Mercury
Constr. Corp., 460 U.S. 1, 24-25, 103 S.Ct. 927, 941 (1983); Prudential Securities, Inc. v. Marshall, 909 S.W.2d at 898;
Hou-Scape, 945 S.W.2d at 205. Arbitration clauses are enforced under the FAA, therefore, unless it can be said with positive
assurance that the clause is not susceptible of an interpretation that covers the dispute at issue. United Steelworkers v.
Warrior & Gulf Navigation Co., 363 U.S. 574, 582-83, 80 S.Ct. 1347, 1353 (1960); Pennzoil Exploration & Prod. Co. v.
Ramco Energy, Ltd., 139 F.3d 1061, 1067 (5th Cir.1998); Prudential Sec., 909 S.W.2d at 899; Hou-Scape, 945 S.W.2d at
205. But this strong policy favoring arbitration does not permit stretching an arbitration provision beyond its intended scope.
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                                                                                                                       R330
Associated Air Freight, Inc. v. Meek, Not Reported in S.W.3d (2001)
2001 WL 225516

See Teamsters v. Stanley Structures, Inc., 735 F.2d 903, 905 (5th Cir.1984); Beckham v. William Bayley Co., 655 F.Supp.
288, 291-92 (N.D.Tex.1987); Belmont Constructors, 896 S.W.2d at 356.

*4 In determining whether an arbitration clause encompasses a claim, courts focus on the facts alleged, not the causes of
action asserted. Prudential Sec., 909 S.W.2d at 900; Hou-Scape, 945 S.W.2d at 205. Whether a claim is within the scope of
an agreement to arbitrate is a matter of contract interpretation and thus a question of law for the court. AT & T Technologies,
Inc. v. Communications Workers of America, 475 U.S. 643, 649, 106 S.Ct. 1415, 1418-19 (1986); see Beckham, 655 F.Supp.
at 290; We consider whether the facts alleged are “factually intertwined” with the contract containing the arbitration clause.
Anglin, 842 S.W.2d at 271; Hou-Scape, 945 S.W.2d at 205;see also Genesco, Inc. v. T. Kakiuchi & Co., 815 F.2d 840, 846
(2d Cir.1987) (whether facts alleged “touch” matters covered by the underlying agreement); American Recovery Corp. v.
Computerized Thermal Imaging, Inc., 96 F.3d 88, 93 (4th Cir.1996) (“significant relationship” to the contract); Griffin v.
Semperit of Am., Inc., 414 F.Supp. 1384, 1389 (S.D.Tex.1976) (“inextricably enmeshed” with the contract). That a tort claim
would not have arisen “but for” the parties’ contract does not necessarily determine whether that claim is arbitrable. Tracer
Research Corp. v. National Environ. Serv. Co., 42 F.3d 1292, 1295 (9th Cir.1994).

The arbitration clause Associated relies on here, excerpted in full above, is contained in agreements by which Associated
appointed first PLMC, and then ULI, as Associated’s sales agents. The arbitration provision states only that: “In the event of
a dispute hereunder, the parties hereto agree to submit same to arbitration ....“ (emphasis added) The plain language of the
clause contemplates a dispute under the sales-agency agreement.

As Judge Fitzwater, of the United States District court for the Northern District of Texas at Dallas, explained in Beckham,
arbitration clauses generally require the parties to arbitrate “ ‘any controversy or claim arising out of or relating to [the]
contract or the breach thereof,’ “ or, alternatively, “ ‘any controversy concerning the interpretation, performance, or
application of [the] contract.’ “ Beckham, 655 F.Supp. at 291 (brackets in original). An arbitration provision that omits these
broad terms indicates the parties to the contract did not agree to arbitrate all disputes arising out of their business relationship.
Id.; see Belmont Constructors, Inc., 896 S.W.2d at 358.

The Meeks’ and PLMC’s allegations in this lawsuit touch only tangentially on the agency sales agreements. The allegations
focus instead on the professional relationship between the Meeks and their former partners and shareholders, and sound
strongly in tort and legal and equitable duties beyond those encompassed by the sales-agency agreements. Given these
allegations, and the narrow arbitration clause, which restricts arbitration to disputes under the sales-agency agreement, we
conclude the arbitration clause in the agreement is not susceptible to an interpretation that covers the Meeks’ and PLMC’s
claims. E.g., Prudential Sec., 909 S.W.2d at 899. Because Associated, therefore, did not establish that the Meeks’ and
PLMC’s claims are within the scope of the arbitration provision, Associated has not established that the trial court clearly
abused its discretion by not requiring the Meeks and PLMC to arbitrate their claims under the FAA. Accordingly, Associated
has not established its right to mandamus relief on that basis.



B. Forum-Selection Clause
*5 Associated also requests mandamus relief to require the trial court to enforce a forum-selection clause in the sales-agency
agreements. Associated requests this relief based on two cases in which the supreme court has granted interlocutory relief by
mandamus because “special circumstances” warranted revising a trial court’s scheduling order. See In re Colonial Pipeline
Co., 968 S.W.2d 938, 943 (Tex.1998); General Motors Corp. v. Gayle, 951 S.W.2d 469, 477 (Tex.1997). These special
circumstances are not present here. Moreover, as Associated concedes, “it is presently unclear” whether mandamus will issue
to enforce a forum-selection clause. Because mandamus requires a clear right to relief, ISK Biotech Corp., 933 S.W.2d at
568, Associated has not established its right to the extraordinary writ on this ground.




                                                            Conclusion

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Associated Air Freight, Inc. v. Meek, Not Reported in S.W.3d (2001)
2001 WL 225516

We dismiss the interlocutory appeal in Cause No. 01-00-00994-CV for want of jurisdiction, and deny mandamus relief in
Cause No. 01-00-00843-CV, including the motion for emergency relief.



All Citations

Not Reported in S.W.3d, 2001 WL 225516

Footnotes
4
       The Honorable Lee Duggan, Jr., retired Justice, Court of Appeals, First District of Texas at Houston, participating by assignment.

1
       In its motion for stay pending arbitration, Associated specifically stated: “Comes now [Associated] and moves that this matter be
       stayed pending arbitration pursuant to the Federal Arbitration Act....”
2
       In their pleadings, the Meeks and PLMC acknowledge that Associated had a right to terminate the first agency agreement; their
       complaint is that Associated was a party to a conspiracy with the Meeks’ former partners.
3
       Before the trial judge ruled on the motion to stay pending arbitration, the Meeks and PLMC dismissed all claims against
       Associated except the claim that Associated conspired with Hill, Mims, and Rogers, in breach of the legal, equitable, and fiduciary
       duties Hill, Mims, and Rogers owed the Meeks and PLMC.



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                                                                            Legal Remedies and Proceedings
                   896 S.W.2d 807
               Court of Appeals of Texas,                                 Forum selection clause does not apply to tort
                      Texarkana.                                          action alleging that plaintiff was induced by
                                                                          misrepresentations to enter into the contract,
       Lavern T. BUSSE and Jeff Busse, Appellants,                        where construction of the rights and liabilities of
                          v.                                              the parties under the contract is not involved;
      PACIFIC CATTLE FEEDING FUND # 1, LTD.,                              where wrongs arise from misrepresentations
                       Appellee.                                          inducing a party to execute the contract, and not
                                                                          from breach of the contract itself, remedies and
No. 06–94–00052–CV. | Submitted Dec. 8, 1994. |                           limitations specified by the contract do not
Decided March 14, 1995. | Rehearing Denied March                          apply.
                    14, 1995.

                                                                          14 Cases that cite this headnote
Limited partnership sued sellers of cattle for violations of
Texas Securities Act and the Deceptive Trade Practices
Act (DTPA), fraud, and breach of contract, after cattle
marketing program failed. The 14th Judicial District
Court, Dallas County, John McClellan Marshall, J.,              [3]
                                                                          Contracts
entered judgment for partnership, and sellers appealed.                     Legal Remedies and Proceedings
The Court of Appeals, Cornelius, C.J., held that: (1)
contractual forum selection clause did not control; (2)                   Forum selection clause did not control claim by
DTPA claim was applicable to out-of-state facts; (3)                      partnership against majority shareholder of
feeding contracts were “securities” under Texas Securities                cattle marketing enterprise, where case did not
Act; (4) out-of-court fraudulent statements admitted at                   involve     interpretation,  enforcement,     or
trial were not hearsay; (5) sufficient evidence supported                 construction of terms of contract, but rather
fraud and DTPA award; (6) partnership was not limited to                  alleged deceptive practices, misrepresentations,
breach of contract damages; and (7) damages were                          and fraud in the inducement to sign the contract
properly limited to three times actual damages.                           predating the contract; thus the rights,
                                                                          allegations, and cause of action did not arise
Affirmed.                                                                 from the contract, but from the Deceptive Trade
                                                                          Practices Act (DTPA), the Texas Securities Act,
                                                                          and the common law, and where the defendants
                                                                          were not parties to the contract. V.T.C.A., Bus.
                                                                          & C. § 17.44; Vernon’s Ann.Texas Civ.St. art.
 West Headnotes (39)                                                      581–1 et seq.

[1]
         Contracts                                                        18 Cases that cite this headnote
            Agreement as to Place of Bringing Suit;
          Forum Selection Clauses

         Forum selection clauses are valid in Texas;
                                                                [4]
         parties are allowed to choose forum in which to                  Appeal and Error
         litigate their disputes.                                           Cases Triable in Appellate Court

                                                                          Choice of law question is subject to de novo
         13 Cases that cite this headnote                                 review on appeal.


                                                                          2 Cases that cite this headnote
[2]
         Contracts

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                                                                          analysis. Restatement (Second) of Conflicts §
                                                                          6(2).
[5]
       Action
         What Law Governs
                                                                          2 Cases that cite this headnote
       When determining choice of law questions,
       court will generally follow statutory directives
       of its own state, subject to constitutional
       limitations.                                             [9]
                                                                          Antitrust and Trade Regulation
                                                                            What Law Governs;  Territorial Limitations
       3 Cases that cite this headnote
                                                                          Texas Deceptive Trade Practices Act (DTPA)
                                                                          was applicable to facts of case, even though
                                                                          meeting and other facts transpired in Iowa, and
                                                                          DTPA did not explicitly provide that it was to
[6]
       Antitrust and Trade Regulation                                     apply to out-of-state facts affecting Texas
         Purpose and Construction in General                              consumers, where definition of “trade” and
                                                                          “commerce” in DTPA justified application of
       Texas Deceptive Trade Practices Act (DTPA)                         Texas rather than Iowa law, Texas plaintiff was
       will be liberally construed in order to protect                    solicited, in part, in Texas, and was suing Texas
       consumers from false, misleading, and deceptive                    resident and Iowa resident, and thus application
       business practices, and to provide efficient and                   of Texas law was justified by sufficient
       economical procedures to secure such                               significant relationships, and application of
       protection. V.T.C.A., Bus. & C. § 17.44.                           Texas law did not render it unconstitutionally
                                                                          broad, unreasonable or arbitrary. V.T.C.A., Bus.
                                                                          & C. §§ 17.44, 17.45(6); Restatement (Second)
       3 Cases that cite this headnote                                    of Conflict § 6(2).


                                                                          7 Cases that cite this headnote
[7]
       Action
         What Law Governs
                                                                [10]
       If state legislature intends for statute to be                     Judgment
       applied to out-of-state facts, courts will so apply                  Absence of Issue of Fact
       it unless constitutional limitations forbid it,                    Judgment
       application to out-of-state facts is permissible                     Presumptions and Burden of Proof
       even when local law of another state would be
       applicable under usual choice of law principles.                   Movant is entitled to summary judgment when it
                                                                          shows that there is no genuine issue of material
                                                                          fact and that it is entitled to judgment as a matter
       1 Cases that cite this headnote                                    of law; in deciding whether material fact issue
                                                                          precludes summary judgment, court will take as
                                                                          true any evidence favoring the nonmovant and
                                                                          will resolve any doubts and every reasonable
[8]                                                                       inference in the nonmovant’s favor. Vernon’s
       Action                                                             Ann.Texas Rules Civ.Proc., Rule 166a(c).
         What Law Governs

       If construction of Texas statute justifies                         Cases that cite this headnote
       application of Texas law rather than another
       state’s law, and that does not offend the
       Constitution, it is not necessary to engage in the
       “significant relationships” choice of law
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[11]
       Securities Regulation
         Persons Liable                                                   2 Cases that cite this headnote

       Person or corporation who offers or sells
       unregistered security is liable to the buyer, who
       may sue for damages, under Texas Securities              [15]
       Act. Vernon’s Ann.Texas Civ.St. art. 581–33,                       Securities Regulation
       subd. A(1).                                                          Investment Contracts

                                                                          Finishing-and-feeding contracts met statutory
       Cases that cite this headnote                                      and case-law requirements for an investment
                                                                          contract, and thus were “securities” for purposes
                                                                          of Texas Securities Act, where investor bought
                                                                          cattle and simultaneously entered into contracts
                                                                          with feeding company, which provided that
[12]
       Securities Regulation                                              investor would pay for feeding the cattle, and
         Persons Liable                                                   once cattle were ready for slaughter, feeding
                                                                          company would repurchase them at cost plus
       Person who directly or indirectly controls seller                  12% of interest, reimburse investor for its
       or issuer of a security is liable jointly and                      incurred feed cost, and pay investor $25 per
       severally under Texas Securities Act statute                       head profit. Vernon’s Ann.Texas Civ.St. art.
       providing that offerer or seller of unregistered                   581–1 et seq.
       security may be liable to the buyer, together
       with the seller or issuer and to the same extent
       as the seller or issuer. Vernon’s Ann.Texas                        Cases that cite this headnote
       Civ.St. art. 581–33, subd. F(1).


       1 Cases that cite this headnote
                                                                [16]
                                                                          Securities Regulation
                                                                            Fraudulent or Other Prohibited Practices

                                                                          Sale of finishing-and-feeding          contracts,
[13]
       Securities Regulation                                              “securities” for purposes of Texas Securities
         Investment Contracts                                             Act, violated the Act, where company that
                                                                          located and managed livestock enrolled in
       An investment contract involves: a common                          feeding company’s program sent investor
       enterprise in which a person expects profits                       brochures constituting an advertisement in
       solely from the efforts of the promoter or a third                 public solicitation, acting on behalf of feeding
       party; such contract is a “security” for purposes                  company and arranging sales for cattle feeding
       of the Texas Securities Act. Vernon’s                              operations, even though entity locating and
       Ann.Texas Civ.St. art. 581–4, subd. A.                             managing livestock may not have been agent of
                                                                          feeding company, and feeding company may not
                                                                          have known of brochures, as statute requires no
       Cases that cite this headnote                                      scienter. Vernon’s Ann.Texas Civ.St. art. 581–5,
                                                                          subd. I.


[14]
                                                                          Cases that cite this headnote
       Securities Regulation
         Recovery for Fraud

       Texas Securities Act does not require proof of
       scienter. Vernon’s Ann.Texas Civ.St. art. 581–1          [17]
                                                                          Securities Regulation
       et seq.                                                              Persons Liable

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       Term “control person” in Texas Securities Act is
       used in same broad sense as in federal statute,                    Defendant waived complaint to comment by
       and major shareholders and directors are control                   plaintiff’s counsel that court had already
       persons. Vernon’s Ann.Texas Civ.St. art.                           determined in deciding earlier motion that
       581–33, subd. F.                                                   defendant was a control person for a company
                                                                          selling securities in violation of Texas Securities
                                                                          Act, where not until the next day did the
       5 Cases that cite this headnote                                    defendants move for mistrial on grounds that
                                                                          statement improperly informed jury of court’s
                                                                          prior ruling and implied that defendant was a
                                                                          wrongdoer, and failed to request curative
[18]                                                                      instruction. Vernon’s Ann.Texas Civ.St. art.
       Trial                                                              581–33, subd. F.
         Time for Taking

       Complaint about improper comment by counsel                        2 Cases that cite this headnote
       is waived unless objection is timely made;
       objection is not timely made unless it is made at
       the earliest practical moment.
                                                                [22]
                                                                          Trial
       Cases that cite this headnote                                        In General;  Duty of Court
                                                                          Trial
                                                                            Instruction or Admonition to Jury

[19]                                                                      Improper argument is rarely cause for a mistrial
       Trial                                                              and usually can be cured by an instruction.
         Time for Taking

       Failure to press for an instruction at the time of                 2 Cases that cite this headnote
       an allegedly erroneous jury argument operates
       as a waiver of any complaint which may be
       made as to the argument.
                                                                [23]
                                                                          Appeal and Error
       3 Cases that cite this headnote                                      Rulings on Motions

                                                                          Complaint regarding comment by opposing
                                                                          counsel was not preserved for review, where
[20]                                                                      defendants failed to get ruling on mistrial
       Appeal and Error                                                   motion.
         Rulings by Lower Court

       Where record fails to show that motion for                         Cases that cite this headnote
       mistrial directed to the argument of counsel was
       not overruled by the trial court, no error is
       preserved for review.
                                                                [24]
                                                                          Evidence
       Cases that cite this headnote                                        Nature and Admissibility

                                                                          Hearsay is out-of-court statement offered in
                                                                          evidence to prove truth of matter asserted, and
[21]                                                                      evidence of out-of-court statement is hearsay
       Trial                                                              only if it is introduced to prove truth of matter
         Time for Taking

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       asserted. Rules of Civ.Evid., Rule 801(d).                         against the great weight and preponderance of
                                                                          the evidence that it is clearly wrong and unjust.
       3 Cases that cite this headnote
                                                                          Cases that cite this headnote


[25]
       Evidence
                                                                [28]
         Making of Statement Fact in Issue                                Fraud
                                                                            Elements of Actual Fraud
       Out-of-court statements made by employee of
       feeding company, cattle seller, and bank were                      Under Iowa law, as interpreted by Texas
       not hearsay, as they were not offered for proof                    appellate court, elements of fraud are a material
       of matter asserted, where investor in cattle                       misrepresentation, made knowingly, with intent
       feeding and marketing plan offered statements                      to induce plaintiff to act or refrain from acting,
       only as operative facts, to show that they were                    on which plaintiff justifiably relies, with
       made, as elements of fraud that investor was                       damages.
       trying to prove.

                                                                          1 Cases that cite this headnote
       2 Cases that cite this headnote


                                                                [29]
                                                                          Fraud
[26]
       Appeal and Error                                                     Weight and Sufficiency
         Interrogatories and Special Verdicts
       Appeal and Error                                                   Evidence was factually sufficient to support jury
         Total Failure of Proof                                           findings that cattle seller had committed fraud
                                                                          and engaged in deceptive acts under Iowa law,
       In reviewing a no evidence point, reviewing                        where cattle seller made misrepresentations that
       court considers only evidence and inferences,                      product demand was outstripping supply, that he
       when viewed in their most favorable light, that                    would use money received from investor to
       tend to support the finding, and disregards all                    purchase more bulls and increase inventory of
       evidence and inferences to the contrary; but if                    cattle feeder and marketer, that he had contracts
       there was more than a scintilla of evidence to                     with certain buyers, and that he was personally
       support the finding, the no evidence challenge                     committed to funding project to success, where
       fails.                                                             there was evidence that cattle seller failed to
                                                                          disclose facts that because feeding program was
                                                                          unproven, bulls had serious health problems and
       Cases that cite this headnote                                      high death loss, most inventory was not
                                                                          saleable; demand for products was not great;
                                                                          cattle seller was company’s majority
                                                                          shareholder, and also was sole secured creditor
[27]                                                                      with ability to foreclose on assets, feeding
       Appeal and Error                                                   company did not have funds or prospect of
         Extent of Review                                                 funds to pay significant percentage of its
       Appeal and Error                                                   existing obligations to investors; and cattle seller
         Clear or Palpable Weight or Preponderance                        had threatened to cut off funds to feeding
                                                                          company and was seeking buyer for company.
       In reviewing factual insufficiency point,
       appellate court first must examine all of the
       evidence, and having considered and weighed                        Cases that cite this headnote
       all that evidence, it will set aside the verdict
       only if the evidence is so weak or the finding so
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[30]                                                            [32]
       Antitrust and Trade Regulation                                     Action
         Reliance;  Causation;  Injury, Loss, or                            Nature of Action
       Damage                                                             Damages
       Antitrust and Trade Regulation                                       Natural and Probable Consequences of Torts
         Omissions and Other Failures to Act in
       General;  Disclosure                                               Plaintiff presented evidence of damages that
                                                                          were primarily tort related, rather than for
       For deceptive acts under Deceptive Trade                           breach of contract damages, and thus they could
       Practices Act (DTPA), consumer may maintain                        be recovered in their tort action for fraudulent
       action where a false, misleading, or deceptive                     inducement to enter transaction, even though
       act or practice constitutes a producing cause of                   types of damages alleged could also result from
       actual damages; failure to disclose information                    breach of contract, where plaintiff, who invested
       about goods or services can be a deceptive act if                  in cattle for enrollment in feeding and finishing
       the failure to disclose was intended to induce                     contracts, not only sought damages for the
       consumer to enter into transaction. V.T.C.A.,                      difference between value as represented and
       Bus. & C. §§ 17.46(b)(23), 17.50(a)(1).                            received, but also for out-of-pocket expenses,
                                                                          loss of credit, reputation, loss of time value, and
                                                                          loss to business reputation.
       5 Cases that cite this headnote

                                                                          1 Cases that cite this headnote

[31]
       Antitrust and Trade Regulation
         Weight and Sufficiency
                                                                [33]
                                                                          Trial
       Evidence was legally and factually sufficient to                     Written Requests or Prayers
       support jury’s findings that cattle seller was                     Trial
       liable to investor under Deceptive Trade                             Sufficiency and Scope of Exceptions to
       Practices Act (DTPA), as cattle seller made                        Failure or Refusal to Instruct
       misrepresentations that were a producing cause
       of investor’s damages, where, when investor                        Party requesting jury instruction must do three
       investigated to find out why bulls were not                        things to preserve error: tender in writing and
       being slaughtered and why investor was not                         request proper instruction before submission;
       being paid in compliance with contracts, cattle                    make a specific objection to its omission; and
       seller told him they had a bid order coming and                    obtain ruling from the court.
       that investor should continue to hold onto bulls
       and continue feeding them, and told investor
       that he still believed in program and was buying                   2 Cases that cite this headnote
       more cattle and putting them on feed, and after
       investor sent demand letter, seller responded
       with letter asking for an additional ten days and
       made representations that bid order was                  [34]
       supposed to come in, but then told feeding                         Appeal and Error
       company’s board that because litigation was                          Objection to Refusal of Requested Charge
       imminent, seller was calling his note and
       foreclosing on assets. V.T.C.A., Bus. & C. §                       Party waived alleged error in trial court’s failure
       17.50(a)(1).                                                       to submit requested instruction on mitigation of
                                                                          damages, even through party submitted proper
                                                                          jury instruction that court rejected, where party
       Cases that cite this headnote                                      failed to object at charge conference.


                                                                          1 Cases that cite this headnote
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                                                                          Cases that cite this headnote

[35]
       Trial
         Mode of Making Objection
                                                                [38]
                                                                          Antitrust and Trade Regulation
       Defendants waived any complaint regarding jury                       Enhanced Damages;  Double or Treble
       instruction on definition of “exemplary                            Damages
       damages,” even though defendants’ attorney
       specifically objected to reference to “stupid” and                 Legislature intended treble damages to be a cap
       “mean” defendant in the definition, where                          on total damages recoverable in Deceptive
       defendants did not renew objection after court                     Trade Practices Act (DTPA) action, regardless
       modified the instruction.                                          of number of defendants. V.T.C.A., Bus. & C. §
                                                                          17.50(b)(1).

       Cases that cite this headnote
                                                                          1 Cases that cite this headnote



[36]
       Appeal and Error
                                                                [39]
         Instructions in General                                          Antitrust and Trade Regulation
       Appeal and Error                                                     Enhanced Damages;  Double or Treble
         Damages and Amount of Recovery                                   Damages

       Jury instruction defining exemplary damages                        Damages were correctly reduced to $1,215,000,
       was not reversible error, even though portion of                   three times the jury’s finding of actual damages
       instruction that stated that exemplary damages                     of $405,000, the limit provided by Deceptive
       could only be imposed against “really stupid” or                   Trade Practices Act (DTPA), even though jury
       “really mean” defendant departed from correct                      found additional damages under DTPA of
       standard and was improper, where standard used                     $729,000 against one defendant and $496,000
       by court placed more onerous burden of proof                       against another defendant. V.T.C.A., Bus. & C.
       on plaintiff than proper standard, and court did                   § 17.50(b)(1).
       not say that defendants were “stupid and mean,”
       but only that such characteristics, if found,
       would justify imposition of exemplary damages.                     1 Cases that cite this headnote


       Cases that cite this headnote


                                                               Attorneys and Law Firms

[37]
       Antitrust and Trade Regulation                          *811 James H. Baumgartner, Jr., David Reese, Vial,
         Enhanced Damages;  Double or Treble                   Hamilton, Koch & Knox, Dallas, for appellants.
       Damages
                                                               Orrin L. Harrison, III, Vinson & Elkins, LLP, Eric R.
                                                               Cromartie, Hughes & Luce, LLP, Thomas W. Mills, Jr.,
       Consumer who prevails under Deceptive Trade
                                                               Mills Presby & Anderson, Dallas, for appellee.
       Practices Act (DTPA), for knowing violation
       may recover three times first $1,000 of actual          Before CORNELIUS, C.J., and BLEIL and GRANT, JJ.
       damages plus three times actual damages in
       excess of $1,000; equal to trebling of actual
       damages. V.T.C.A., Bus. & C. § 17.50(b)(1).


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                       OPINION                                 with beef, and that he was carrying Lean and Free beef on
                                                               his own menus at Bonanza steakhouses. At the close of
                                                               the meeting, Lavern Busse told Bert that he should deal
CORNELIUS, Chief Justice.                                      with ADI and that ADI would put together a group of
                                                               Busse’s bulls that Pacific could buy and place with Lean
Lavern T. Busse and his son, Jeff Busse, appeal from an        and Free for feeding.
adverse judgment rendered in Pacific Cattle Feeding
Fund’s suit against them for damages resulting from            After the meeting, Bert received through the mail at his
Pacific’s investment in a failed cattle marketing              Texas offices some Lean and Free advertising brochures
arrangement. Pacific sued the Busses, alleging Texas           that contained analyses of the rate of return investors
Securities Act and Deceptive Trade Practices Act               would receive by investing in Lean and Free.
violations, common law fraud, and breach of contract.
The court rendered summary judgment for Pacific on the         Bert testified that before he invested he learned that an
Securities Act claims. The jury found in Pacific’s favor on    ADI officer had been convicted of fraud involving cattle
the DTPA and fraud claims. The court directed verdicts         contracts. Steve Knutson, a banker at Norwest Bank in
for the Busses on Pacific’s breach of contract claims.         Iowa, called Bert to tell him that ADI’s chief executive
                                                               officer, Dennis Peterson, had served some time in prison.
Stan Bert formed the Pacific Cattle Corporation, of which      Bert then called Jeff Busse. Jeff Busse told Bert that they
he was president and sole shareholder, in September            knew about Peterson’s history but that controls were in
1985. He formed the Pacific Cattle Feeding Fund # 1,           place at ADI to protect investors. Bert and Jeff Busse had
here called “Pacific,” as a Texas limited partnership with     a second phone conversation in which they discussed the
Pacific Cattle Corporation as general partner in 1986–87.      difficulties Pacific was having arranging financing at
Pacific began investing in cattle in October 1988.             Norwest Bank for the bull purchase. Bert testified that
                                                               Jeff Busse told him that if the financing did not come
Lean and Free, an Iowa corporation, was formed in              through, Lavern Busse would sell the bulls to other
September 1987 by twenty-five investors to take                buyers. Bert testified that Jeff told him he would speak to
advantage of a process developed in England by which           Knutson at the bank to speed the matter along.
Holstein bulls fed a special diet purportedly produced
beef low in saturated fat, calories, and cholesterol. Lean     Pacific bought 1,362 cattle from Lavern Busse on January
and Free encountered financial difficulties early, and by      25, 1990. Pacific simultaneously entered into feeding and
April or May of 1988, it approached Lavern Busse about         finishing contracts with Lean and Free. The contracts
providing capital. In December of 1988, Lavern Busse           provided that Pacific would pay for feeding the cattle, and
made Lean and Free a loan of $150,000, and in January          once the cattle were ready for slaughter, Lean and Free
1989, he increased the loan to $243,000. In April 1989,        would repurchase them at cost plus 12% interest,
Lean and Free approached Lavern Busse about additional         reimburse Pacific for its incurred feed costs, and pay
monies. In response, Lavern increased the amount of his        Pacific $25 per head profit.
loan and converted the loan into common and preferred
stock, making him the major stockholder.                       Lean and Free failed to find enough markets to support its
                                                               operations. By April 1990, it had failed to repurchase
Pacific alleged that Bert learned about Lean and Free in       Pacific’s cattle, failed to reimburse Pacific for its feed
1989 from Dean Freed of Ag Dimensions International            costs, and failed to pay the $25 per head profit. On June 7,
(ADI), which was locating and managing livestock               1990, Lean and Free’s directors allowed Lavern Busse, as
enrolled in the Lean and Free Program. ADI told Bert           its only secured creditor, to foreclose on the company’s
about Lavern Busse, and Bert and Lavern Busse met on           processed inventory and trade name. From June 1990 to
October 23, 1989, at Lavern’s office in Cedar Rapids,          January 1991, Pacific continued to feed its cattle and
Iowa. Present *812 at the meeting were ADI principals          gradually sold them off.
and Mike Knipp, a Lean and Free manager. Lavern Busse
already had bulls enrolled in the Lean and Free program        Pacific filed suit against Lavern and Jeff Busse in August
under what were called finishing contracts. Bert testified     1991. It alleged that the Busses knew Lean and Free was
that Lavern Busse assured him that there was more              failing and that they sold the bulls to Pacific as part of a
demand for Lean and Free beef than they could satisfy,         scheme to liquidate the inventory before the business
that he needed to get more investors like Pacific so he        went under.
could invest more of his money to increase inventory, that
Lean and Free was building inventory so it could meet          The trial court granted partial summary judgment in favor
demand, that it had a contract with Amway to supply it
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of Pacific on its claims against Lavern Busse under the        ticket and a ticket cancellation insurance policy. They
Texas Securities Act and granted the Busses a directed         sued the travel agent and the cruise line, as principal,
verdict on Pacific’s breach of contract and alter ego          when the cruise was canceled and the insurance refused to
claims. The other issues were submitted to a jury, which       reimburse them. The ticket contract had a forum-selection
found in favor of Pacific, assessing actual damages,           clause setting California as forum for any lawsuit “arising
additional damages under the DTPA, and punitive                out of or in any manner relating” to the contract. The
damages under the common law fraud claims. The court           court held that the DTPA action involved
entered judgment for Pacific on its DTPA claim, but            misrepresentations and nondisclosures leading to the
reduced the additional damages by $405,000.                    ticket’s purchase, not a construction of the ticket contract.

The Busses contend in their first point of error that the      Likewise, in this case the causes of action are based on
trial court erred in denying their motion to dismiss based     alleged fraud and deceptive practices that induced Pacific
on forum selection clauses in the feeding and finishing        to enter into the contracts, not to interpret or enforce
contracts.                                                     rights under the contracts. Moreover, the Busses were not
                                                               even parties to the contracts. Although Pacific alleged that
[1]   [2]
        Forum selection clauses are valid in Texas.            Lean and Free was Lavern Busse’s alter ego, they failed
Greenwood v. Tillamook Country Smoker, 857 S.W.2d              to prove that allegation.
654, 657 (Tex.App.—Houston [1st Dist.] 1993, no writ).
Parties are allowed to choose the forum in which to            The Busses rely on Barnette v. United Research Co., 823
litigate their disputes. In this case, the feeding and         S.W.2d 368 (Tex.App.—Dallas 1991, writ denied). That
finishing contracts between Pacific and Lean and Free          case, however, is distinguishable because there the issues
contained the following clauses:                               arose from an employment contract and from the parties’
                                                               employer-employee relationship that implicated the
            This agreement and the rights and                  contract terms. Here, the fraud and misrepresentation
            obligations of the parties arising                 allegations deal not with the terms of the contract, but
            hereto shall be construed in                       predate the contract and deal with inducement to sign the
            accordance with the laws *813 of                   contract. Similarly, the case of Brock v. Entre Computer
            the State of Iowa, with venue in                   Centers, Inc., 740 F.Supp. 428 (E.D.Tex.1990), involved
            [certain Iowa counties].                           a provision that applied to “any action” and was not
                                                               limited to actions arising under the contract itself.
A forum selection clause, however, does not apply to a         Moreover, the court in Brock was construing a federal
tort action alleging that the plaintiff was induced by         venue statute not involved here.
misrepresentations to enter into the contract, where
construction of the rights and liabilities of the parties      For the reasons stated, we conclude that the contractual
under the contract is not involved. See Caton v. Leach         forum selection clauses do not control this suit.
Corp., 896 F.2d 939, 942–43 (5th Cir.1990); Pozero v.
Alfa Travel, Inc., 856 S.W.2d 243, 245 (Tex.App.—San           The Busses also contend that the court erred in denying
Antonio 1993, no writ). Where the wrongs arise from            their motion for judgment notwithstanding the verdict as
misrepresentations inducing a party to execute the             to Pacific’s DTPA claim because Iowa law, not Texas
contract and not from breach of the contract, remedies and     law, applies to the transaction.
limitations specified by the contract do not apply. See        [4] [5] [6]
Caton v. Leach Corp., supra; Decision Control Systems,                  A choice of law question is subject to de novo
Inc. v. Personnel Cost Control, Inc., 787 S.W.2d 98,           review on appeal. See, e.g., Huddy v. Fruehauf Corp., 953
100–01 (Tex.App.—Dallas 1990, no writ).                        F.2d 955, 956 (5th Cir.1992). When determining choice
                                                               of law questions, a court will generally follow the
[3]                                                            statutory directives of its own state, subject to
    This case does not involve an interpretation or
construction of the contracts but rather the                   constitutional limitations. RESTATEMENT (SECOND)
misrepresentations and fraud in the inducement to sign the     OF CONFLICT OF LAWS § 6(1) (1971). The Texas
contracts. The rights, obligations, and cause of action do     Deceptive Trade Practices Act will be liberally construed
not arise from the contracts but from the Deceptive Trade      in order to protect consumers from false, misleading, and
Practices Act, the Texas Securities Act, and the common        deceptive business practices and to provide efficient and
law.                                                           economical procedures to secure such protection.
                                                               TEX.BUS. & COM.CODE ANN. § 17.44 (Vernon 1987).
In Pozero v. Alfa Travel, Inc., a couple purchased a cruise

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The Busses do not argue that the DTPA’s reach is               shows there is no genuine issue of material fact and that it
unconstitutionally broad. Here we have a Dallas-based          is entitled to judgment as a matter of law. TEX.R.CIV.P.
partnership suing a Texas resident, Lavern Busse. Jeff         166a(c). In deciding whether a material fact issue
Busse, an Iowa resident, has waived any jurisdictional         precludes summary judgment, the court will take as true
complaint and has subjected himself to the jurisdiction of     any evidence favoring the nonmovant and will resolve
the Texas court. He does not raise the issue on appeal.        any doubts and every reasonable inference in the
                                                               nonmovant’s favor. Nixon v. Mr. Property Management,
[7]
    If the State Legislature intends for a statute to be       690 S.W.2d 546, 548–49 (Tex.1985).
applied to out-of-state facts, the courts will so apply it
                                                               [11] [12] [13]
unless constitutional *814 limitations forbid it.                          A person or corporation who offers or sells an
RESTATEMENT (SECOND) OF CONFLICT OF                            unregistered security is liable to the buyer, who may sue
LAWS § 6(1) cmt. b (1971). Application to out-of-state         for damages.            TEX.REV.CIV.STAT.ANN. art.
facts is permissible even when the local law of another        581–33A(1) (Vernon Supp.1995). A person who directly
state would be applicable under usual choice of law            or indirectly controls a seller or issuer of a security is
principles. Id.                                                liable jointly and severally under Section 33A with the
                                                               seller or issuer and to the same extent as the seller or
[8]    [9]
        Although the Texas DTPA does not explicitly            issuer. TEX.REV.CIV.STAT.ANN. art. 581–33F(1)
provide or state an intention that it is to apply to           (Vernon Supp.1995). An investment contract is a
out-of-state facts affecting Texas consumers, it is to be      “security.” TEX.REV.CIV.STAT.ANN. art. 581–4A
applied liberally to protect those citizens from false,        (Vernon Supp.1995). An investment contract involves (1)
misleading, and unconscionable acts, and it does not           a common enterprise in which a person (2) expects profits
provide that its application will be limited to acts or        (3) solely from the efforts of the promoter or a third party.
practices occurring in Texas. Moreover, the DTPA’s             Securities and Exchange Commission v. W.J. Howey Co.,
definition of “trade” and “commerce” includes the sale of      328 U.S. 293, 66 S.Ct. 1100, 90 L.Ed. 1244 (1946);
any good or service “wherever situated” if the trade or        Russell v. French & Associates, Inc., 709 S.W.2d 312,
commerce directly or indirectly affects the people of          314 (Tex.App.—Texarkana 1986, writ ref’d n.r.e.). A
Texas. TEX.BUS. & COM.CODE ANN. § 17.45(6)                     security is exempt from registration if the sale is made
(Vernon 1987); Reed v. Israel Nat’l Oil Co., 681 S.W.2d        without public solicitation or advertisement and the issuer
228 (Tex.App.—Houston [1st Dist.] 1984, no writ). As           sold its securities during the preceding twelve months to
noted, here we have a Texas plaintiff who was solicited,       not more than fifteen persons who bought for their own
in part, in Texas, suing a Texas resident and an Iowa          account.       TEX.REV.CIV.STAT.ANN. art. 581–5I
resident. Even under a traditional choice of law analysis,     (Vernon Supp.1995).
Texas would have sufficient contacts to Pacific’s claims
so the application of Texas law would not be                   Pacific’s summary judgment motion raised two grounds:
unreasonable or arbitrary. If construction of the Texas        (1) Lavern Busse sold unregistered securities to Pacific in
statute justifies the application of Texas rather than Iowa    violation of the Texas Securities Act, and (2) Lavern
law, and that does not offend the constitution, it is not      Busse and a corporation he controlled, Lean and Free,
necessary to engage in the choice of law analysis based on     offered and sold securities to Pacific by means of untrue
the significant relationships set out in RESTATEMENT           statements of material fact or misleading omissions of
(SECOND) OF CONFLICT OF LAWS § 6(2) (1971).                    material fact or both, in violation of the Securities Act.
See, e.g., Siskind v. Villa Foundation for Education, Inc.,
642 S.W.2d 434 (Tex.1982). If such an analysis is proper,      In the order granting partial summary judgment, the court
we find that the record reveals sufficient significant         found that (1) Lavern Busse was a control person for Lean
relationships to justify the application of Texas law to the   and Free, (2) Pacific bought a security from Lean and
controversy here. Consequently, since it does not offend       Free that the Securities Act required to *815 be registered
constitutional principles to apply Texas law in this case,     but was not registered, (3) the security was not exempt
we conclude that the trial court correctly refused to apply    from the Act’s registration requirements, (4) the sale was
Iowa law.                                                      made through the use of materially misleading statements
                                                               and omissions on which Pacific relied in purchasing the
The Busses also contend that the trial court erred in          security, and (5) Lavern Busse was liable to Pacific for its
granting Pacific’s motion for partial summary judgment         damages as a result of Busse’s violations of the Act.
on its Securities Act claims against Lavern Busse.
                                                               Lavern Busse in his summary judgment response did not
[10]
       A movant is entitled to a summary judgment when it      dispute that the securities were sold through the use of

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materially misleading statements and omissions, so he has
                                                                [18] [19] [20]
waived that issue.                                                        Complaint about improper comment by counsel
                                                                is waived unless objection is timely made. An objection is
[14]
    The Texas Securities Act does not require proof of          not timely made unless it is made at the earliest practical
scienter. American General Ins. Co. v. Equitable General        moment. City of Corsicana v. Herod, 768 S.W.2d 805,
Corp., 493 F.Supp. 721 (E.D.Va.1980). If there was              815–16 (Tex.App.—Waco 1989, no writ). Failure to press
adequate summary judgment proof that Lean and Free              for an instruction at the time of an allegedly erroneous
sold an unregistered security that was not exempt from          jury argument operates as a waiver of any complaint
registration and that Lavern Busse was a control person,        which may be made as to the argument. Fowler v. Garcia,
the summary judgment was proper.                                687 S.W.2d 517, 520 (Tex.App.—San Antonio 1985, no
                                                                writ). Where the record fails to show that a motion for
[15]
    That Lean and Free sold the finishing-and-feeding           mistrial directed to the argument of counsel was not
contracts is not disputed. On appeal the Busses argue that      overruled by the trial court, no error is preserved for
a fact question remains as to whether the contracts are a       review. Biard Oil Co. v. St. Louis Southwestern Ry. Co.,
security. The Busses in their memorandum in opposition          522 S.W.2d 588, 590 (Tex.Civ.App.—Tyler 1975, no
to Pacific’s summary judgment motion argue that the             writ).
contracts are “forwarding” contracts. They do not argue
that the elements of the forwarding contracts are different     During discussions before the court and the jury in
from an investment contract. We conclude that the               connection with a hearsay objection, Pacific’s counsel
contracts meet the statutory and case-law requirements for      said that the court had already determined that Lavern
an investment contract.                                         Busse was a control person for Lean and Free. The court
                                                                had already decided that question with its ruling on
[16]
     As to whether the securities were exempt, the              Pacific’s motion for partial summary judgment, but the
summary judgment evidence shows that ADI sent to                jurors had not been told. The next day, the Busses’ moved
Pacific two brochures: “A Profile of AG Dimensions              for a *816 mistrial on grounds that the statement
International, Inc.” and “The Lean and Free Beef                improperly informed the jury of the court’s prior ruling
Challenge to White Meat.” These constituted an                  and that the statement implied that Lavern Busse was a
advertisement and public solicitation. ADI was acting for       wrongdoer. The court reserved its ruling on the motion.
Lean and Free in arranging sales for the cattle feeding
                                                                [21] [22] [23]
operations. Whether ADI was Lavern Busse’s agent or                         If counsel’s comment was error, the Busses
whether Lavern Busse knew of the brochures is irrelevant.       waived their complaint because they failed to timely
The statute requires no scienter.                               object. Although there is no bright-line rule to determine
                                                                the timeliness of an objection, we conclude that an
[17]
    As to whether Lavern Busse was a “control person,”          objection made the day following the objectionable event
that term in the Texas statute is used in the same broad        is not timely. Moreover, the Busses failed to request a
sense       as         in     the      federal       statute.   curative instruction. Improper argument is rarely cause for
TEX.REV.CIV.STAT.ANN. art. 581–33F cmt. (Vernon                 a mistrial and usually can be cured by an instruction.
Supp.1995).                 Major              shareholders,    Standard Fire Ins. Co. v. Reese, 584 S.W.2d 835, 839–40
TEX.REV.CIV.STAT.ANN. art. 581–33F cmt., and                    (Tex.1979). The Busses also failed to get a ruling on their
directors, Salit v. Stanley Works, 802 F.Supp. 728, 734–35      mistrial motion, so their complaint was not preserved for
(D.Conn.1992), are control persons. As Lavern Busse was         review.
both the majority shareholder and a director, he was a
control person within the meaning of the statutes.              The Busses also allege error because the court admitted
                                                                testimony and documentary evidence about statements
As all the statutory elements required to show a violation      made by employees of Lean and Free, Ag Dimensions
of the Texas Securities Act were established by summary         International, and Norwest Bank. They urge that the
judgment evidence, summary judgment for Pacific on that         statements were hearsay and were highly prejudicial. The
issue was proper.                                               Busses point to four pieces of evidence admitted over
                                                                their objections. They are two pieces of Bert’s testimony
In their fourth point of error, the Busses complain because     about what Dean Freed of ADI had told him about Lavern
the court allowed Pacific’s attorney to advise the jury of      Busse; Bert’s testimony about what Steve Knutson of
the court’s ruling on Pacific’s motion for partial summary      Norwest Bank told him about Lavern Busse; and a
judgment. They argue that this was an impermissible             brochure titled “Lean and Free Beef Challenge to White
comment on the weight of the evidence.                          Meat.”

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                                                               he received from Pacific to purchase more bulls and
[24]
     Hearsay is an out-of-court statement offered in           increase the Lean and Free inventory; that he had
evidence to prove the truth of the matter asserted.            contracts with certain buyers; and that he was personally
TEX.R.CIV.EVID. 801(d). Evidence of an out-of-court            committed to funding the project to success.
statement is hearsay only if it is introduced to prove the
truth of the matter asserted. Turner, Collie & Braden, Inc.    *817 Jeff Busse directly reassured both Bert and the bank
v. Brookhollow, Inc., 642 S.W.2d 160, 167 (Tex.1982).          that the Busses had control over the activities of ADI and
                                                               drew up the documents. He signed the contracts between
[25]
    The statements in question were not offered for the        Lean and Free and Pacific and prepared and signed the
proof of the matter asserted. In fact, Pacific argued that     assignment documents covering Pacific’s purchase of the
they were false rather than true. They were offered only to    bulls.
show that they were made, as elements of the fraud
Pacific was trying to prove, i.e., as operative facts. See     There was also evidence that the Busses failed to disclose
Williams v. Jennings, 755 S.W.2d 874, 885                      these facts: (1) because the Lean and Free program was
(Tex.App.—Houston [14th Dist.] 1988, writ denied);             unproven, bulls had serious health problems, had damage
Yellow Freight System, Inc. v. North American Cabinet          to their digestive tracts, had high death loss, and had high
Corp., 670 S.W.2d 387, 390 (Tex.App.—Texarkana 1984,           disease rates; (2) the inventory being accumulated and
no writ). It was not error to admit the statements.            carried at cost on the Lean and Free books had substantial
                                                               problems and most of it was not salable; (3) demand for
In their sixth point of error, the Busses contend that the     the product was not great because of its high cost,
trial court erred in overruling their motions for judgment     appearance, and taste; (4) Lean and Free had a going
notwithstanding the verdict and for new trial because          concern qualification on its most recent audited financial
there was no or insufficient evidence to support the jury’s    statements; (5) Lean and Free had low sales for years and
findings that they had committed fraud and engaged in          the Busses had no reason to believe sales would improve;
deceptive acts.                                                (6) Lavern Busse was not only Lean and Free’s majority
                                                               shareholder, but also its sole secured creditor with the
[26]
    In reviewing a no evidence point, the reviewing court      ability to foreclose on its assets; (7) Lean and Free had
considers only the evidence and inferences, when viewed        neither the funds nor the prospect of funds based on past
in their most favorable light, that tend to support the        performance, present contracts, and future promises to
finding and disregards all evidence and inferences to the      pay for even a significant percentage of its existing
contrary. Davis v. City of San Antonio, 752 S.W.2d 518,        obligations to investors; (8) Lavern Busse was reducing
522 (Tex.1988). If there is more than a scintilla of           his unsecured exposure to Lean and Free by selling bulls
evidence to support the finding, the no evidence challenge     to investors; and (9) Lavern Busse had no long-term
fails. Stafford v. Stafford, 726 S.W.2d 14, 16 (Tex.1987).     commitment to Lean and Free, had threatened to cut off
                                                               funds before the sale to Pacific, and was seeking a buyer
[27] [28]
        In reviewing a factual insufficiency point, the        for the company.
appellate court first must examine all of the evidence,
                                                               [29]
Lofton v. Texas Brine Corp., 720 S.W.2d 804, 805                   There is more than a scintilla of evidence to support
(Tex.1986), and having considered and weighed all the          the jury findings. We also find, after reviewing all the
evidence, it will set aside the verdict only if the evidence   evidence, that it is factually sufficient to support the jury
is so weak or the finding so against the great weight and      findings.
preponderance of the evidence that it is clearly wrong and
                                                               [30]
unjust. Cain v. Bain, 709 S.W.2d 175, 176 (Tex.1986).             As to deceptive acts under the DTPA, a consumer may
The court apparently held that Iowa law controlled the         maintain an action where a false, misleading, or deceptive
common law fraud action. Neither side appeals that             act or practice constitutes a producing cause of actual
decision. Under Iowa law the elements of fraud are: a          damages. TEX.BUS. & COM.CODE ANN. § 17.50(a)(1)
material misrepresentation; made knowingly; with intent        (Vernon 1987). A failure to disclose information about
to induce the plaintiff to act or refrain from acting; on      goods or services can be a deceptive act if the failure to
which the plaintiff justifiably relies; with damages. Beeck    disclose was intended to induce the consumer to enter into
v. Kapalis, 302 N.W.2d 90, 94 (Iowa 1981).                     the transaction. TEX.BUS. & COM.CODE ANN. §
                                                               17.46(b)(23) (Vernon Supp.1995); see Cameron v. Terrell
Bert testified that Lavern Busse made several                  & Garrett, Inc., 618 S.W.2d 535, 541 (Tex.1981).
misrepresentations: that the product demand was
                                                               [31]
outstripping supply; that he was going to use the money               The   evidence   shows    that   the Busses     made

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misrepresentations that were a producing cause of                the definition of “exemplary damages” because the
Pacific’s damages. Bert testified that when he investigated      definition is an erroneous statement of the law and
to find out why the bulls were not being slaughtered and         constituted an impermissible comment on the weight of
why Pacific was not being paid in compliance with the            the evidence.
contracts, the Busses told him they had a big order
coming and that Pacific should continue to hold onto the         The court gave the following definition:
bulls and continue feeding them. Bert also testified that
Jeff Busse told him that Lavern Busse still believed in the                  “EXEMPLARY DAMAGES” are
program and was buying more cattle and putting them on                       those damages which by law may
feed. After Bert returned to Texas and sent a demand                         be assessed against a really stupid
letter to the Busses, Jeff Busse responded with a letter                     defendant, or a really mean
asking for an additional ten days, until June 8, 1990, and                   defendant, or a really stupid
made representations that a big order was supposed to                        defendant who could have caused a
come in. On June 7, 1990, Jeff Busse told the Lean and                       great deal of harm by its actions but
Free board that, because litigation was imminent, Lavern                     who actually caused minimal harm,
Busse was calling his note and foreclosing on the assets.                    where actual damages have been
                                                                             found, in order to make an example
[32]
    The Busses also say there is no evidence of damages                      of such person or persons and to
to Pacific other than breach of contract damages, which                      deter such conduct on their part in
cannot be recovered in a tort action for fraud. We find,                     the future.
though, that most of the damages Pacific sought and
supported by evidence were tort-related. In addition to          [35]
                                                                      The Busses’ attorney specifically objected to the
seeking the difference between the value as represented          reference to a stupid and mean defendant in the definition.
and received, it sought out-of-pocket expenses, loss of          The court then modified the instruction as to another
credit reputation, loss of time value, and loss to business      portion. The Busses did not renew their objection after the
reputation. While this kind of damage could result from a        court modified the instruction, so they waived any
breach of contract, it can also result from fraudulent           complaint. Wright Way Construction Co. v. Harlingen
inducement to enter into a transaction. Pacific did not sue      Mall Co., supra.
to enforce the contract.
                                                                 [36]
                                                                     Although informing the jury that exemplary damages
We find the evidence to be both legally and factually            could only be imposed against a really stupid or really
sufficient to support the jury findings.                         mean defendant departed from the correct standard and
                                                                 was improper, we do not find it to be reversible, even if
The next complaint is that the trial court erred in failing to   error had been properly preserved. Indeed, the standard
submit a requested instruction on mitigation of damages          used by the court placed a more onerous burden of proof
and requested issues and instructions regarding whether          on Pacific than the proper standard. We cannot see that
Pacific disposed of the bulls in a *818 commercially             the instruction was harmful. The court did not say that the
reasonable manner and in good faith.                             Busses were “stupid and mean,” but only that such
[33] [34]
                                                                 characteristics, if found, would justify the imposition of
       A party requesting a jury instruction must do three       exemplary damages.
things to preserve error: (1) tender in writing and request
the proper instruction before submission, (2) make a             Pacific contends in its cross-point that the court erred in
specific objection to its omission, and (3) obtain a ruling      reducing its damages. It argues that it is entitled to
from the court. Wright Way Construction Co. v.                   $1,620,000 in damages under the DTPA rather than the
Harlingen Mall Co., 799 S.W.2d 415, 418–19                       $1,215,000 awarded by the trial court. The court awarded
(Tex.App.—Corpus Christi 1990, writ denied). The                 damages of $1,215,000, three times the jury’s finding of
Busses, although they tendered a proper jury instruction         actual damages, $405,000. The jury found additional
that the court rejected, failed to object at the charge          damages under the DTPA of $729,000 against Lavern
conference, and so waived their complaint. If they               Busse and $486,000 against Jeff Busse, which together
preserved their complaint, they still failed to show that the    also total three times actual damages.
failure to give the instruction probably caused the
rendition of an improper verdict.                                [37]
                                                                     A consumer who prevails under the DTPA under a
                                                                 knowing violation may recover three times the first
Complaint is also made that the court erred in submitting        $1,000 of actual damages plus three times the actual

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damages in excess of $1,000. This is equal to a trebling of         Providence Hospital v. Truly, 611 S.W.2d 127, 135
actual damages. TEX.BUS. & COM.CODE ANN. §                          (Tex.Civ.App.—Waco 1980, writ dism’d). We agree with
17.50(b)(1) (Vernon Supp.1995); Jim Walter Homes, Inc.              the authorities that suggest that this was the legislative
v. Valencia, 690 S.W.2d 239, 241 (Tex.1985).                        intent and hold that the trial court correctly reduced the
                                                                    damages to the limit provided by the DTPA.
Pacific argues it is entitled to $1,630,000 ($729,000 +
$405,000 + $486,000), because damages allocated to                  *819 For the reasons stated, the judgment is in all things
Lavern Busse ($720,000 + $405,000 = $1,134,000) are                 affirmed.
under the $1,215,000 legislative cap and the damages
allocated to Jeff Busse ($405,000 + $496,000 = $891,000)
also are under the legislative cap.
                                                                    All Citations
[38] [39]
      It appears that the Legislature intended the treble
damages to be a cap on the total damages recoverable in a           896 S.W.2d 807
DTPA action regardless of the number of defendants. See
Jim Walter Homes, Inc. v. Valencia, 690 S.W.2d at 241;
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In re Advance Payroll Funding, Ltd., 254 S.W.3d 710 (2008)




                                                         254 S.W.3d 710
                                                     Court of Appeals of Texas,
                                                               Dallas.

                                     In re ADVANCE PAYROLL FUNDING, LTD., Relator.
                                            Advance Payroll Funding, Ltd., Appellant
                                                              v.
                                             Landry Marks Partners, LP, Appellee.

                                             No. 05–07–00992–CV. | May 21, 2008.


Synopsis
Background: Buyer of accounts receivable brought action against seller, asserting claims for fraudulent misrepresentation,
negligent misrepresentation, fraudulent transfer, unjust enrichment, and aiding and abetting fraud, alleging that seller sold the
accounts knowing that they were not real obligations. Seller filed motion to stay proceedings and compel arbitration under
arbitration clause of seller’s factoring agreement with original holder of the accounts. The 95th Judicial District Court, Dallas
County, Karen Gren Johnson, J., denied the motion, and seller filed interlocutory appeal and petition for writ of mandamus.



Holdings: The Court of Appeals, Morris, J., held that:
[1]
      buyer was not required to arbitrate its claims under theory of direct-benefits estoppel;
[2]
      letter agreement between buyer and seller did not incorporate factoring agreement by reference; and
[3]
      buyer did not assume, and was not assigned, original holder’s obligations to seller under factoring agreement.


Petition denied; appeal dismissed.


Attorneys and Law Firms

*711 Charles Thomas Kruse, Baker & Hostetler LLP, Houston, for appellant.

Roger B. Cowie, Locke Liddell & Sapp, LLP, Charles Glen Morris, Crews, Shepherd & McCarty, LLP, Dallas, for appellee.

*712 Before Justices MORRIS, FITZGERALD, and LANG.




                                                              OPINION

Opinion by Justice MORRIS.

In this consolidated interlocutory appeal and petition for writ of mandamus, Advance Payroll Funding, Ltd. contends the trial
court erred when it denied its motion to compel arbitration of claims filed by Landry Marks Partners, LP. Advance Payroll
Funding asserts that Landry Marks, a nonparty to the agreement containing the arbitration clause, should be compelled to
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arbitrate its claims under the theory of equitable estoppel. For the reasons that follow, we deny the petition for writ of
mandamus and dismiss the interlocutory appeal.




                                                                I.

Advance Payroll Funding (APF) and Landry Marks are both engaged in the factoring business.1 In 2005, APF executed a
factoring agreement with Administrative Staffing Resources, L.L.C. (ASR). That agreement contained an arbitration clause
giving APF the right to have “any dispute or disagreement between the parties arising out of or relating to this Agreement, or
the transactions or relationships contemplated hereby, resolved by arbitration....” In 2006, Landry Marks executed a factoring
agreement with ASR for the accounts receivable then owned by APF. As a condition to that agreement, ASR was required to
terminate its agreement with APF. On December 11, 2006, ASR and APF signed a termination agreement that required ASR
to pay APF $2,676,192.37 and APF to assign back to ASR all of ASR’s accounts. On that date, Landry Marks wire-
transferred to APF the specified payoff amount on behalf of ASR. Landry Marks and APF also signed a letter agreement
providing that, upon Landry Marks’s payment of ASR’s obligations to APF, APF would provide a letter notifying account
debtors of the transfer of the accounts, terminate its UCC filings against ASR’s assets, and return any funds received on
ASR’s accounts after December 11, 2006. Shortly after acquiring the ASR accounts, Landry Marks learned that many of the
accounts were not real obligations and ASR’s president admitted he had provided false information to Landry Marks about
the accounts.

Landry Marks sued APF to recover the payoff amount, asserting claims for fraudulent misrepresentation, negligent
misrepresentation, fraudulent transfer, unjust enrichment, and aiding and abetting fraud.2 APF filed a motion to stay
proceedings and compel arbitration of Landry Marks’s claims under the Texas Arbitration Act (TAA) and the Federal
Arbitration Act (FAA) based on the arbitration clause in APF’s factoring agreement with ASR. The trial court denied the
motion. APF filed this interlocutory appeal and petition for writ of mandamus challenging the trial court’s denial.




                                                               II.
[1] [2] [3] [4]
            As a preliminary matter, we note that APF urges that the FAA rather than the TAA governs the arbitration clause at
issue.3 Landry Marks does not contest *713 the applicability of the FAA. The APF–ASR contract involves an Ohio
company’s purchase of a Texas company’s accounts receivable and, thus, evidences transactions involving interstate
commerce. The FAA applies to contracts involving interstate commerce. See Jack B. Anglin, Co., Inc. v. Tipps, 842 S.W.2d
266, 272 (Tex.1992) (orig. proceeding). Moreover, the contract provides that Ohio law governs the parties’ agreement.
Where parties agree that another state’s substantive law applies to their contract, the TAA is inapplicable. See In re J.D.
Edwards World Solutions Co., 87 S.W.3d 546, 551 (Tex.2002) (orig. proceeding). We therefore dismiss APF’s interlocutory
appeal because the TAA does not apply to this case.4 Under the FAA, mandamus relief is appropriate if the trial court abused
its discretion in failing to stay the litigation and compel arbitration. In re Merrill Lynch Trust Co. FSB, 235 S.W.3d 185, 188
(Tex.2007) (orig. proceeding).
[5] [6] [7] [8]
            APF asserts Landry Marks is equitably estopped from avoiding arbitration because (1) the liability and damages for
its claims against APF arise from or depend on the APF–ASR factoring agreement and (2) Landry Marks deliberately sought
and obtained benefits from that factoring agreement when it paid off ASR’s obligations and requested APF to take the actions
listed in the letter agreement.5 Generally, arbitration of a claim cannot be compelled unless it falls within the scope of a valid
arbitration agreement. See In re Oakwood Mobile Homes, Inc., 987 S.W.2d 571, 573 (Tex.1999) (orig. proceeding),
abrogated in part on other grounds by In re Halliburton Co., 80 S.W.3d 566, 571–72 (Tex.2002). There are several
recognized instances, however, where a nonparty to the agreement may nevertheless be bound to arbitrate its claims. See
Merrill Lynch, 235 S.W.3d at 191; In re Weekley Homes, L.P., 180 S.W.3d 127, 131 (Tex.2005). For example, a nonparty

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may be required to arbitrate if (1) liability for its claim arises from the contract containing the arbitration provision or (2) it
deliberately seeks and obtains substantial benefits from the contract itself. Weekley Homes, 180 S.W.3d at 132–33. This
theory, known as direct-benefits estoppel, will not create liability for noncontracting parties that does not otherwise exist. Id.
at 134. Nor does it apply when the benefits alleged are insubstantial or indirect. Id.

In this case, Landry Marks’s claims do not arise from the APF–ASR factoring agreement but are based instead on APF’s
alleged misrepresentations or omissions with respect to the existence and amount of the accounts receivable Landry Marks
purchased from ASR. Simply because Landry Marks forwarded the purchase price directly to APF as the current owner of
the accounts does not mean Landry Marks’s claims arose from or are dependent upon the factoring agreement from which
APF derived its ownership interest. Contrary to APF’s position, any duty owed to Landry Marks with respect to
misrepresentations or disclosures on the accounts arose from general obligations imposed by law as a result of their dealings
and were not derived from the APF–ASR factoring *714 agreement. Likewise, the payoff amount and actions requested of
APF did not arise from the factoring agreement but from the termination agreement between ASR and APF.

In essence, the APF–ASR factoring agreement merely created the conditions that led Landry Marks to deal with APF. There
is nothing in the record to suggest Landry Marks received any substantial benefit from the factoring agreement itself or that
its claims depend on the factoring agreement. As such, direct-benefits estoppel does not apply to Landry Marks’s claims
against APF and the trial court did not abuse its discretion in denying APF’s motion to compel arbitration on this ground.




                                                               III.
[9] [10] [11]
           APF also argues that the trial court erred in denying its motion to compel arbitration because (1) the APF–ASR
factoring agreement was incorporated by reference into the letter agreement between Landry Marks and APF and (2) Landry
Marks accepted assignment of the ASR accounts and, thus, assumed ASR’s obligations under the APF–ASR factoring
agreement. Neither of these arguments were presented to the trial court. It is well established that arguments not presented to
the trial court will not be considered in a petition for writ of mandamus. See American Optical, 988 S.W.2d at 714. Even if
the arguments were properly before us, however, we conclude they are without merit.

APF maintains the phrase “your receipt of $2,676,192.37 ... in full payment of ASR’s obligations to you” in the parties’ letter
agreement necessarily refers to ASR’s obligations under the factoring agreement. We disagree that this language incorporates
by reference the APF–ASR factoring agreement into the letter agreement. In fact, the payment obligation mentioned arose
directly from the agreement to terminate the APF–ASR factoring agreement.

We likewise reject APF’s contention that Landry Marks assumed or was assigned ASR’s obligations under the APF–ASR
factoring agreement. As noted above, that factoring agreement was terminated in a separate agreement executed by APF and
ASR. Any references to Landry Marks’s “assignment” of the accounts arose from the ASR–Landry Marks factoring
agreement.

We conclude the trial court did not abuse its discretion in denying APF’s motion to compel arbitration. We deny APF’s
petition for writ of mandamus and dismiss its interlocutory appeal.



All Citations

254 S.W.3d 710

Footnotes


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1
      Factoring involves the purchase of accounts receivable from companies at a discounted rate.

2
      Landry Marks also sued ASR and other defendants. The claims against these additional defendants are not relevant to the
      disposition of this appeal.
3
      APF has filed its interlocutory appeal “in the unlikely event that this Court does not agree that the FAA applies to this dispute.”

4
      An interlocutory appeal is the proper vehicle for challenging the denial of a motion to compel arbitration under the TAA. See
      Tipps, 842 S.W.2d at 272.
5
      APF also argues that Landry Marks should be bound to the arbitration clause because it “stepped into the shoes” of ASR by
      tortiously interfering with the factoring agreement’s exclusivity clause. Because APF did not present this argument to the trial
      court, we will not consider it here. See In re American Optical Corp., 988 S.W.2d 711, 714 (Tex.1998) (orig. proceeding).



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                                                   2008 WL 5413097
                                     Only the Westlaw citation is currently available.

                   SEE TX R RAP RULE 47.2 FOR DESIGNATION AND SIGNING OF OPINIONS.

                                              MEMORANDUM OPINION
                                               Court of Appeals of Texas,
                                                         Dallas.

                        In re WILMER CUTLER PICKERING HALE AND DORR LLP, Relator.

                                         No. 05–08–01395–CV. | Dec. 31, 2008.

Original Proceeding from the 401st Judicial District Court, Collin County, Texas, Trial Court Cause No. 401–00568–2008,
Mark Rusch, J.

Attorneys and Law Firms

R. Paul Yetter, Gregory S. Coleman, Yetter, Warden & Coleman, LLP, Houston, TX, David E. Keltner, Kelly Hart &
Hallman, LLP, Fort Worth, TX, for Relator.

Lynda Lee Weaver, Martin E. Rose, Rose Walker, LLP, Dallas, TX, Joe Kendall, Provost Umphrey Law Firm, L.L.P.,
Steven Dominic Sanfelipo, Dallas, TX, for Real Parties in Interest.

Before Justices WHITTINGTON, FITZGERALD, and LANG–MIERS.




                                                MEMORANDUM OPINION

Opinion by Justice FITZGERALD.

*1 Real party in interest, McAfee, Inc., sued relator, the law firm of Wilmer Cutler Pickering Hale and Dorr LLP, on several
theories of liability including fraud. Relator moved to dismiss on several grounds, including a contractual forum-selection
clause and lack of ripeness. The trial court signed an order dismissing every claim except for fraud. Relator seeks mandamus
relief, asking us to direct the trial court to dismiss the fraud claim as well. We deny relator’s petition for writ of mandamus.




                                                     I. BACKGROUND

In 2002, McAfee’s former chief financial officer, Prabhat Goyal, became the subject of a federal investigation for securities
fraud. Goyal retained relator in connection with that matter. The investigation led to the filing of a twenty-count federal
indictment against Goyal in 2004 in the Northern District of California. Goyal continued to retain relator to defend him in
that matter. He was eventually convicted of at least some counts in that case.

Goyal had an indemnity agreement with McAfee, pursuant to which McAfee was obliged to indemnify and defend Goyal
against actions brought against him by reason of his status as an agent of McAfee. In that agreement, McAfee promised to
advance Goyal’s defense costs, and Goyal promised to repay those costs if it were ultimately determined that Goyal was not

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entitled to be indemnified. Accordingly, McAfee paid Goyal’s legal bills incurred in connection with the securities-fraud
investigation and prosecution for several years. Goyal’s legal fees and expenses from the start of the federal investigation
through Goyal’s conviction were approximately $12 million.

In April 2008, McAfee sued relator in Texas state court, alleging that relator billed McAfee for roughly $6.8 million of
“unjustifiable legal fees and expenses.” McAfee asserted equitable subrogation, negligence, breach of fiduciary duty, and
fraud as its legal theories of recovery, and it also sought declaratory relief. Relator removed the case to federal court. While
in federal court, McAfee amended its pleadings to add the theories of assumpsit, theft, and gross negligence. The federal
judge later remanded the case on the ground that it was not ripe under federal law. The judge declined to speculate whether
McAfee’s claims were ripe under Texas state law.

After remand, relator filed a motion to dismiss in state court. Relator raised three grounds for dismissal: (1) lack of ripeness,
(2) a forum-selection clause in the indemnity agreement between Goyal and McAfee, and (3) the absence of Goyal, an
indispensable party, from the lawsuit. After a hearing, the judge signed an order denying the motion to dismiss as to
McAfee’s fraud claim but granting it as to all other claims asserted by McAfee. Relator seeks a writ of mandamus compelling
the trial judge to dismiss McAfee’s fraud claim as well. In its petition for writ of mandamus, relator argues only the forum-
selection clause and the lack of ripeness as grounds for relief. Our inquiry is whether relator has demonstrated that the trial
court clearly abused its discretion and that relator has no adequate remedy by appeal. In re McAllen Med. Ctr., Inc., No. 05–
0892, 2008 WL 4051053, at *1 (Tex. Aug.29, 2008).




                                             II. FORUM–SELECTION CLAUSE

*2 In the first of its two issues, relator argues that the trial court should have dismissed McAfee’s fraud claim because of the
forum-selection clause found in the indemnity agreement between McAfee and Goyal. We reject relator’s argument for the
following reasons.



A. Standing to enforce the forum-selection clause
We first consider whether relator, which was not a party to the indemnity agreement between McAfee and Goyal, is entitled
to enforce the forum-selection clause found therein. Ordinarily, a non-party cannot enforce a contract unless it enjoys third-
party beneficiary status. See, e.g., S. Tex. Water Auth. v. Lomas, 223 S.W.3d 304, 306 (Tex.2007) (“A third party may only
enforce a contract when the contracting parties themselves intend to secure some benefit for the third party and entered into
the contract directly for the third party’s benefit.”). Relator does not directly contend that it is a third-party beneficiary of the
indemnity agreement (although, as discussed below, it does rely on an alleged admission by McAfee that relator was a third-
party beneficiary in connection with a different theory). Rather, relator relies on this Court’s holding that a “transaction
participant” can enforce a forum-selection clause even if the participant was not actually a party to the contract. Accelerated
Christian Educ., Inc. v. Oracle Corp., 925 S.W.2d 66, 75 (Tex.App.-Dallas 1996, no writ). In its reply brief, relator also
asserts the theory of equitable estoppel. Under this theory, a non-signatory defendant can invoke a forum-selection clause if
the signatory plaintiff “has sued signatory and non-signatory defendants based on substantially interdependent and concerted
misconduct by all defendants.”Phoenix Network Techs. (Europe) Ltd. v. Neon Sys., Inc., 177 S.W.3d 605, 622 (Tex.App.-
Houston [1st Dist.] 2005, no pet.)(analogizing to the law governing arbitration agreements); accord Deep Water Slender
Wells, Ltd. v. Shell Int’l Exploration & Prod., Inc., 234 S.W.3d 679, 694 (Tex.App.-Houston [14th Dist.] 2007, pet. denied).



1. Transaction participant
Relator does not fit the definition of “transaction participant” that we adopted in Accelerated Christian Education.In that
case, we defined transaction participant as “an employee of one of the contracting parties who is individually named by

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another contracting party in a suit arising out of the contract containing the forum selection clause.”925 S.W.2d at 75.From
the context, it is plain that the employee relationship must have existed at the time of the transaction containing the forum-
selection clause. See id.(“To hold otherwise would allow a nonsignatory employee, who was a transaction participant, to
defeat his company’s agreed-to forum by refusing to be bound by the employer’s contract.”). And in a subsequent
unpublished but persuasive opinion, we closely analyzed the question of whether the nonsignatory was an employee of the
signatory at the time of the transaction. Robbins & Myers, Inc. v. J.M. Huber Corp., No. 05–01–00139–CV, 2002 WL
418206, at *3 & n. 5 (Tex.App.-Dallas March 19, 2002, no pet.)(not designated for publication). Relator points to no
evidence that it was an employee of Goyal at the time the indemnity agreement was executed, or that it had any involvement
in the indemnity agreement transaction at all. Indeed, relator acknowledges in its reply brief that it is not Goyal’s employee.

*3 Relator presents two arguments in support of its position that it is a transaction participant. First, relator argues that
McAfee admitted that relator is, after all, a third-party beneficiary of the indemnity agreement. We have reviewed the
pleading cited by relator in support of this argument, and we do not agree that McAfee admitted relator’s third-party
beneficiary status. At one time McAfee pleaded for declaratory relief that it “has fulfilled and discharged any and all
liabilities to [relator] as a third party beneficiary to the agreement by paying past fees, and to declare that [McAfee] is not
obligated to pay any outstanding fees or expenses or fees for future work to [relator].” (Emphasis added). As we read this
pleading, McAfee did not concede relator’s third-party beneficiary status, but only sought a declaration that McAfee had
discharged its liabilities to relator as a third-party beneficiary if any such liabilities existed.

Second, relator argues that it is a “transaction participant” because McAfee made all of the payments at issue because of the
indemnity agreement. This argument fails because it does not address the requirement that a “transaction participant” must
have been an employee of a signatory at the time of the transaction containing the forum-selection clause. According to
relator’s own recitation of the facts, some six years passed between the execution of the indemnity agreement and Goyal’s
need to retain relator as counsel. Thus, relator fails to show that it was an employee of McAfee or Goyal when the indemnity
agreement was executed or that relator participated in that transaction in any way. Its participation in the invoice-and-
payment transactions with McAfee years later is irrelevant.



2. Equitable estoppel
This leaves relator’s equitable-estoppel theory of standing to enforce the forum-selection clause. Under this theory, relator
had to demonstrate that McAfee “has sued signatory and non-signatory defendants based on substantially interdependent and
concerted misconduct by all defendants.”See Phoenix Network, 177 S.W.3d at 622.Relator is the only defendant, so plainly
McAfee has not sued both signatory and nonsignatory defendants. Moreover, McAfee does not allege interdependent and
concerted misconduct by relator and signatory Goyal. The only misconduct at issue is the alleged fraud by relator. Relator
argues that equitable estoppel is supported by McAfee’s allegations that it required Goyal to review and approve relator’s
invoices before forwarding them to McAfee for payment. But McAfee alleges no wrongdoing by Goyal in connection with
relator’s invoices, much less that Goyal was a participant in relator’s alleged fraud. Accordingly, relator has not shown that
the facts of this case compel application of the equitable-estoppel theory of standing.



3. Conclusion
Relator has not shown that it has standing to enforce the forum-selection clause.



B. Interpretation of the forum-selection clause
*4 Even if relator had standing to enforce the forum-selection clause, we would still overrule its first issue because the
forum-selection clause does not cover McAfee’s fraud claim. Paragraph 19 of the indemnity agreement provides as follows:

  Consent to Jurisdiction.[McAfee] and [Goyal] each hereby irrevocably consent to the jurisdiction of the courts of the State

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  of Delaware for all purposes in connection with any action or proceeding which arises out of or relates to this Agreement
  and agree that any action instituted under this Agreement shall be brought only in the state courts of the State of Delaware.

This provision has two parts: a consent to Delaware jurisdiction for any action that “arises out of or relates to” the indemnity
agreement, and a mandatory forum-selection provision for any action “instituted under” the indemnity agreement. Courts
have recognized that clauses in which parties merely “consent” or “submit” to the jurisdiction of a particular forum are
permissive rather than mandatory, and a mere consent-to-jurisdiction clause will not justify dismissing a suit that is filed in a
different forum. E.g., Dunne v. Libbra, 330 F.3d 1062, 1063 (8th Cir.2003); Keaty v. Freeport Indonesia, Inc., 503 F.2d 955,
956–57 (5th Cir.1974); see also Sw. Intelecom, Inc. v. Hotel Networks Corp., 997 S.W.2d 322, 323–26 (Tex.App.-Austin
1999, pet. denied) (clause whereby parties “stipulate to jurisdiction [in] Minnesota, as if this Agreement were executed in
Minnesota” was not a mandatory forum-selection clause); Weisser v. PNC Bank, N.A., 967 So.2d 327, 330
(Fla.Dist.Ct.App.2007) (distinguishing mandatory forum-selection clauses from permissive clauses that “constitute nothing
more than a consent to jurisdiction and venue in the named forum and do not exclude jurisdiction or venue in any other
forum”).

In construing the clause, we strive to ascertain the intent of the parties by giving the language its ordinary meaning. Valence
Operating Co. v. Dorsett, 164 S.W.3d 656, 662 (Tex.2005). When parties use different language in different parts of a
contract, we may ordinarily assume that they intended different things. Cf. City of Dallas v. Heard, 252 S.W.3d 98, 111
(Tex.App.-Dallas 2008, pet. denied) (“We assume the legislature used different language in each subsection for a reason.”).
In this case, the consent-to-jurisdiction clause has a scope that is different from the mandatory forum-selection clause. The
consent-to-jurisdiction clause is very broad, encompassing all actions that arise out of or relate to the agreement. The phrase
“relates to,” in particular, is recognized as a very broad term. See, e.g., Kirby Highland Lakes Surgery Ctr., L.L.P. v. Kirby,
183 S.W.3d 891 (Tex.App.-Austin 2006, no pet.)(arbitration clause); Whitten v. Vehicle Removal Corp., 56 S.W.3d 293, 308
(Tex.App.-Dallas 2001, pet. denied) (statutory preemption provision).

The mandatory forum-selection clause, by contrast, applies only to actions “instituted under” the indemnity agreement. The
use of different words indicates that the scope of the forum-selection clause is different from the scope of the consent-to-
jurisdiction clause. The phrase “instituted under” connotes a scope narrower than the expansive phrase “arises out of or
relates to.”The plain meaning of “instituted” in this context is “initiated” or “set up,” and the plain meaning of “under” is “in
accordance with” or “subject to the bidding or authority of.”WEBSTER’S THIRD NEW INTERNATIONAL DICTIONARY
OF THE ENGLISH LANGUAGE UNABRIDGED 1171, 2487 (1981). We agree with McAfee that an action is “instituted
under” the indemnity agreement only if the claimant is relying on the terms and authority of the agreement as the basis for the
rights sued upon. In other words, the forum-selection clause of section 19 applies only if the claimant is suing on rights that
are created by the indemnity agreement itself. McAfee’s fraud claim against relator does not depend on the authority or terms
of the agreement. Rather, McAfee alleges that relator defrauded McAfee with repeated misrepresentations “contained in
[relator’s] billings, related correspondence and communication together with [its] reputation as a top law firm.”Relator’s legal
duty not to defraud McAfee in the manner alleged, if any, is created by the common law, not the indemnity agreement.

*5 Relator urges that the “instituted under” requirement is satisfied because McAfee paid Goyal’s legal expenses “under” the
indemnification agreement. The forum-selection clause, however, applies only if McAfee’s action is “instituted under” the
indemnity agreement. Although the indemnity agreement may explain why McAfee was paying relator’s invoices at all, the
fact remains that McAfee is not suing relator based on any rights created by or spelled out in the indemnity agreement itself.
McAfee’s fraud claim is “instituted under” the common law, not the indemnity agreement. We decline to expand the meaning
of the language contained in the agreement. See Lewis v. Foxworth, 170 S.W.3d 900, 903 (Tex.App.-Dallas 2005, no
pet.)(“We may neither rewrite the contract nor add to its language.”).



C. Conclusion
We overrule relator’s first issue.



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                                                           III. RIPENESS

In its second issue, relator argues that McAfee’s fraud claim is not yet ripe, which deprives the trial court of subject-matter
jurisdiction over that claim. Relator’s theory is that the indemnity agreement gives McAfee the right to recoup all of its
payments from Goyal if it is ultimately determined that Goyal is not entitled to indemnification under the agreement. This
determination, relator contends, cannot be made until Goyal’s criminal case, including appeal, has run its course. Thus,
relator concludes, McAfee’s injury remains totally speculative until Goyal’s criminal case is concluded and his right to
indemnification determined. See Perry v. Del Rio, 66 S.W.3d 239, 249 (Tex.2001) (“The central concern [in a ripeness
inquiry] is whether the case involves uncertain or contingent future events that may not occur as anticipated, or indeed may
not occur at all.”).

We reject relator’s argument. It may be true that McAfee’s right of recoupment against Goyal, based on the terms of the
indemnity agreement, is not yet ripe. But McAfee’s right not to be defrauded by relator is separate and independent of any
contractual rights it may enjoy against Goyal. That is, McAfee’s right to recover against relator for fraud does not depend on
a preliminary determination that Goyal has no right to indemnification. Whether Goyal prevails or not, neither he nor relator
enjoys the right to defraud McAfee under any scenario.

In sum, McAfee’s rights against relator are concrete and do not depend on contingent or hypothetical facts, or on events that
may not come to pass. Accordingly, McAfee’s fraud claim against relator is ripe.

We overrule relator’s second issue.




                                                         IV. CONCLUSION

Relator has not shown that the trial court clearly abused its discretion by denying relator’s motion to dismiss as to McAfee’s
fraud claim.1We deny the petition for writ of mandamus.



All Citations

Not Reported in S.W.3d, 2008 WL 5413097

Footnotes
1
       The author of this opinion would also deny relief on the ground that the certification at the end of relator’s petition for writ of
       mandamus does not substantially comply with the requirements of Texas Rule of Appellate Procedure 52.3(j), as amended
       effective September 1, 2008. See In re Butler, No. 05–08–01443–CV, 2008 WL 4952842 (Tex.App.-Dallas Nov.21, 2008, orig.
       proceeding). The rule requires the person filing a petition for writ of mandamus to certify that he or she has read the petition and
       concluded that “every factual statement in the petition is supported by competent evidence included in the appendix or record.”The
       certificate at the end of relator’s petition contains only an averment that “the Petition truly and correctly recites the factual
       allegations set forth in the pleadings and the evidence in the record.”But in light of the foregoing analysis, it is unnecessary to
       address this issue.



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Major Help Center, Inc. v. Ivy, Crews & Elliott, P.C., Not Reported in S.W.3d (2000)




                 2000 WL 298282                                   FACTUAL AND PROCEDURAL BACKGROUND
   Only the Westlaw citation is currently available.
                                                                 In April and May of 1998, Major Help contacted each of
NOTICE: NOT DESIGNATED FOR PUBLICATION.                          the Lawyers for the purpose of selling them television
 UNDER TX R RAP RULE 47.7, UNPUBLISHED                           advertising. According to Major Help’s initial
 OPINIONS HAVE NO PRECEDENTIAL VALUE                             representations, the advertising would be a cooperative
BUT MAY BE CITED WITH THE NOTATION “(not                         venture among twelve local attorneys or law firms.2 Each
         designated for publication).”                           attorney or firm would contribute a sum certain; in return,
                                                                 Major Help would prepare a television advertisement
          Court of Appeals of Texas, Austin.
                                                                 featuring each Lawyer’s name and would purchase air
  MAJOR HELP CENTER, INC. and Robert Berz,                       time to run the ads.
                     Appellants,
                          v.                                     After the initial telephone contact, Berz visited the
   IVY, CREWS & ELLIOTT, P.C.; Guy C. Fisher,                    Lawyers in person and presented a video depicting the
   Esq.; Earl K. Straight, Esq.; Richard T. Jones,               television advertisement that would be broadcast. Major
 Esq.; James P. Borne, Esq.; and McGraw, Brinkley                Help proposed to add the names of each participating
                 & Irwin, Appellees.                             lawyer to the advertisement once they had reached an
                                                                 agreement. According to Berz’s representations, the
      No. 03-99-00285-CV. | March 23, 2000.                      content of the television advertisement had been approved
                                                                 by the State Bar of Texas. Berz also represented to each
                                                                 of the Lawyers that the advertisements would air
From the County Court at Law No. 1 of Travis County,             according to a particular schedule and that Major Help
No. 241,712; Orlinda Naranjo, Judge Presiding.                   would spend a certain amount of money to purchase the
                                                                 air time.
Before Chief Justice ABOUSSIE, Justices KIDD and
SMITH.                                                           The advertisement included a phone number that would
                                                                 be answered by Major Help. Berz represented that Major
Opinion                                                          Help would forward all incoming calls to the participating
                                                                 lawyers on a rotating basis. Major Help was not to screen
SMITH.
                                                                 the calls; rather, it represented that it would automatically
                                                                 forward them with a recording identifying the referral as a
*1 Major Help Center, Inc. is a California corporation that      “Major Help Center call.”
sold television advertising to six lawyers or small law
firms in Austin. When the dissatisfied Lawyers1 sued             Each of the named Lawyers agreed to participate in the
Major Help and its Texas representative Robert Berz for          cooperative advertising arrangement. Each deposited a
violations of the Deceptive Trade Practices Act (DTPA),          sum of money with Major Help and agreed to deposit
the defendants moved to dismiss the cause, citing a forum        additional installments throughout the course of the
selection clause in their contract with the Lawyers which        agreement. Subsequently, each of the Lawyers discovered
designated Los Angeles, California as the agreed forum.          that Major Help had misrepresented their proposed
The trial court denied the motion to dismiss, and a jury         arrangements in several respects: the television
found Major Help and Berz each liable for deceptive trade        advertisement had not been approved by the State Bar of
practices and attorneys’ fees. On appeal, Major Help             Texas; the advertisements were not identical to the one
contends that the trial court erred in refusing to apply the     they had previewed; the ads did not air according to the
forum selection clause to this dispute and that the              promised schedule; and Major Help screened some calls
evidence was legally or factually insufficient to support        rather than automatically forwarding them as it had
the DTPA violations, the alleged double recovery from            represented.
each defendant, and the award of attorneys’ fees. We will
affirm the trial court’s judgment.                               *2 After Major Help failed to respond to the Lawyers’
                                                                 demand for a refund of the funds they had paid, the
                                                                 Lawyers filed suit alleging breach of contract and
                                                                 violations of the Deceptive Trade Practices Act. In
                                                                 response, Major Help filed a special appearance and a
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motion to dismiss based on the forum selection clause in          claims to determine whether they could stand alone or are
its agreement with the Lawyers (the Agreement).3 The              so interwoven with the Agreement that they could not be
Lawyers then dismissed their breach-of-contract claim             maintained without reference to the Agreement. See
and proceeded solely on their DTPA claim. The trial court         Valero Energy Corp. v. Wagner & Brown, II, 777 S.W.2d
denied the special appearance and the motion to dismiss,          564, 566 (Tex.App.-El Paso 1989, writ denied).
and the parties tried the case to a jury.
                                                                  Major Help contends that the Lawyers’ DTPA claim
At the close of evidence, Major Help moved for an                 specifically implicates the written contract terms. For
instructed verdict, arguing that the only basis for the           support, Major Help relies primarily on Texas Source
Lawyers’ DTPA claim was breach of contract, which                 Group, Inc. v. CCH, Inc., 967 F .Supp. 234
alone does not constitute a DTPA violation. The court             (S.D.Tex.1997), and Accelerated Christian, 925 S.W.2d
denied the motion for an instructed verdict and submitted         at 68-69. In Accelerated Christian, the appellate court
the issues to the jury. The jury found Major Help and its         affirmed the trial court’s dismissal of contractual, tort, and
representative liable for DTPA violations and assessed            DTPA claims, reasoning that “pleading alternate
$38,250 in actual damages and $18,000 in attorneys’ fees          noncontractual theories of recovery will not alone avoid a
against each of the two defendants.                               forum selection clause if those alternate claims arise out
                                                                  of the contractual relations and implicate the contract’s
                                                                  terms.” Accelerated Christian, 925 S.W.2d at 72.
                                                                  Similarly, the federal district court in Texas Source Group
                                                                  enforced a forum selection clause and dismissed the
                       DISCUSSION                                 plaintiffs’ contractual and noncontractual claims, holding
                                                                  that the claims arose out of the parties’ contractual
On appeal, Major Help4 first argues that the trial court          relationship and implicated the agreement. See Texas
erred in denying the motion to dismiss because the forum          Source Group, 925 F.Supp. at 238.
selection clause was valid and should have been applied
in this case. Second, Major Help asserts that the Lawyers         *3 The Lawyers counter that their DTPA suit did not arise
presented no evidence or insufficient evidence of DTPA            under the Agreement and therefore the forum selection
violations and that the written contract negated any              clause does not apply. Citing Busse, the Lawyers argue
reliance by the Lawyers on the alleged deceptive                  that where the wrongs arise from misrepresentations
misrepresentations. Third, Major Help alleges that the            inducing a party to execute the contract and not from
jury’s award of damages against each of the two                   breach of the contract, the remedies and limitations
defendants resulted in a double recovery for the same act         specified by the contract do not apply. See Busse, 896
and that the trial court should have found Berz and Major         S.W.2d at 813.
Help jointly and severally liable. Finally, Major Help
contends that the Lawyers failed to establish that the            Texas Source Group, Accelerated Christian, and Busse all
attorneys’ fees they sought were reasonable and                   turned on the issue of whether the claims pleaded
necessary.                                                        implicated the terms of the contract, thereby triggering the
                                                                  forum selection clause. Accelerated Christian and Texas
                                                                  Source Group included contractual and noncontractual
                                                                  claims that necessarily implicated the terms of the
I. Forum Selection Clause
                                                                  contract. See Accelerated Christian, 925 S.W.2d at 72;
Forum selection clauses are valid in Texas. See Busse v.
                                                                  Texas Source Group, 967 F.Supp. at 237-38. Indeed, in
Pacific Cattle Feeding Fund No. 1, Ltd., 896 S.W.2d 807,
                                                                  both cases the noncontractual claims were premised on
812 (Tex.App.-Texarkana 1995, writ denied). “When a
                                                                  the defendant’s failure to comply with a contractual
party contractually consents to the jurisdiction of a
                                                                  duty-a claim that could not have been maintained without
particular state, that state has jurisdiction over that party
                                                                  reference to the terms of the contract. See Accelerated
as long as the agreed-to state will enforce the type of
                                                                  Christian, 925 S.W.2d at 69; Texas Source Group, 967
forum selection clause signed by the parties.” Accelerated
                                                                  F.Supp. at 237-38. Busse, on the other hand, involved
Christian Educ., Inc. v. Oracle Corp., 925 S.W.2d 66, 72
                                                                  misrepresentations and fraud in the inducement to sign a
(Tex.App.-Dallas 1996, no writ). However, forum
                                                                  contract and thus did not implicate the terms of the
selection clauses will not apply if construction of the
                                                                  contract. See Busse, 896 S.W.2d at 813.
rights and liabilities of the parties under the contract is not
involved. See Busse, 896 S.W.2d at 813. Thus, in
                                                                  In this case, the Lawyers assert a single noncontractual
determining whether the forum selection clause applies in
                                                                  cause of action based on alleged misrepresentations made
this case, we must review the nature of the Lawyers’

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by Major Help prior to the date the parties signed the           finding of the trier of fact and disregard all evidence and
Agreement. The Lawyers do not rely on the terms of the           inferences to the contrary. See Burroughs Wellcome Co.
Agreement as the basis for their claims. They do not             v. Crye, 907 S.W.2d 497, 499 (Tex.1995); Best v. Ryan
attempt to enforce duties or obligations arising under the       Auto Group, Inc., 786 S.W.2d 670, 671 (Tex.1990). We
Agreement. These facts are analogous to those in the             will uphold the finding if more than a scintilla of evidence
Busse decision, which we find persuasive. Consequently,          supports it. See Crye, 907 S.W.2d at 499; Seideneck v.
we hold that the Lawyers’ DTPA claim is independent of           Cal Bayreuther Assocs., 451 S.W.2d 752, 755
the Agreement, and the forum selection clause does not           (Tex.1970); In re King’s Estate, 244 S.W.2d 660, 661
apply. To the extent Accelerated Christian or Texas              (Tex.1951). The evidence supporting a finding amounts to
Source Group can be read to compel a different                   more than a scintilla if reasonable minds could arrive at
conclusion, we decline to follow them. We overrule               the finding given the facts proved in the particular case.
Major Help’s first issue.5                                       See Crye, 907 S.W.2d at 499; Transportation Ins. Co. v.
                                                                 Moriel, 879 S.W.2d 10, 25 (Tex.1994); see also William
                                                                 Powers, Jr. & Jack Ratliff, Another Look at “No
                                                                 Evidence” and “Insufficient Evidence,” 69 Tex.L.Rev.
II. DTPA Violations                                              515, 522 (1991); Michol O’Connor, Appealing Jury
In its second issue, Major Help asserts that the Lawyers         Findings, 12 Hous. L.Rev. 65 (1974).
presented no evidence or insufficient evidence of DTPA
violations. Major Help also contends that the Lawyers            We first consider Major Help’s argument that the written
failed to prove reliance on Major Help’s representations         agreement between the parties negated any evidence of
because the written agreement between the parties negates        reliance. Specifically, Major Help emphasizes the clause
any reliance on statements made prior to the signing of          in the Agreement that places on the Lawyers the sole
the Agreement.                                                   responsibility for complying with all applicable marketing
                                                                 and advertising laws, rules, and regulations pertaining to
When a case is tried to a jury, factual-insufficiency            the Lawyers’ profession. This clause, according to Major
complaints must be preserved through a motion for new            Help, should have alerted the Lawyers of their duty to
trial. See Tex.R.Civ.P. 324(b); Cecil v. Smith, 804 S.W.2d       obtain approval from the State Bar of Texas for the
509, 510 (Tex.1991). Major Help did not file a motion for        advertisements and negated any reliance they may have
new trial and thus has failed to preserve its                    placed on Major Help’s representations that the ads had
factual-insufficiency issues.                                    already been approved. We disagree.

No-evidence points must be preserved through one of the          The Lawyers’ burden was to prove that Major Help
following procedural steps in the trial court: (1) a motion      engaged in false, misleading, or deceptive acts that were
for instructed verdict, (2) a motion for judgment                the producing cause of the Lawyers’ injuries. See Church
notwithstanding the verdict, (3) an objection to the             & Dwight Co. v. Huey, 961 S.W.2d 560, 567
submission of the issue to the jury, (4) a motion to             (Tex.App.-San Antonio 1997, pet. denied). The Lawyers
disregard the jury’s answer to a vital fact issue, or, (5) a     were not required to prove reliance before they could
motion for new trial. See Steves Sash & Door Co. v. Ceco         recover under the DTPA. See Weitzel v. Barnes, 691 S
Corp., 751 S.W.2d 473, 477 (Tex.1988). Major Help filed          .W.2d 598, 600 (Tex.1985). Furthermore, although the
a motion for instructed verdict asserting that a breach of       Lawyers were responsible under the Agreement for
contract is not a deceptive trade practice violation, citing     complying with their professional rules regarding
Rocky Mountain Helicopters, Inc. v. Lubbock County               advertising, this fact does not negate Major Help’s
Hosp. Dist., 987 S.W.2d 50 (Tex.1998). The Lawyers               representations that the proposed broadcast had been
claim that the stated basis for the instructed verdict was       examined and approved by the State Bar. The Lawyers’
not sufficiently specific to preserve Major Help’s               complaint is that their individual responsibilities would
no-evidence issues. Although Major Help’s motion for             have been easier if the proposed broadcast had been
instructed verdict did not specifically address the              preapproved by the State Bar of Texas as represented. The
no-evidence issues that Major Help now advances on               record reflects sufficient evidence to conclude that
appeal, it did generally draw the trial court’s attention to a   preapproval of the advertisements induced the Lawyers to
lack of evidence to support the DTPA violations. In the          enter the Agreement.
interest of justice, we will address Major Help’s
no-evidence claims regarding the DTPA violations.                Major Help also argues that the Lawyers should not have
                                                                 relied on the proposed broadcast or advertising schedule
*4 In deciding a no-evidence point, we must consider             because they were simply proposals and depended on the
only the evidence and inferences tending to support the
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participation of twelve lawyers; only six lawyers                  severally liable.
eventually signed the Agreement. As stated above, the
Lawyers were not required to prove reliance in order to            We read Major Help’s third issue as a challenge to the
recover under the DTPA. Moreover, sufficient evidence              measure of damages submitted by the trial court and as a
exists to support a finding that Major Help represented to         complaint of excessiveness of the damages. However, a
the Lawyers that the completed television advertisement            review of the record reveals that Major Help failed to
would be identical to the proposed advertisement and that          preserve this error for appeal. Major Help failed to object
Major Help would obtain the requisite number of                    to the jury charge on the alleged improper measure of
participants. Even if the Lawyers later learned that only          damages, and although Major Help submitted a motion
six attorneys would participate in the cooperative                 for instructed verdict, that motion did not address the
advertising venture, it was Major Help’s initial                   double recovery of damages. See Tex.R.Civ.P. 274, 268;
representations made prior to the Agreement that induced           see also United Postage Corp. v. Kammeyer, 581 S.W.2d
the Lawyers to enter into the Agreement and forms the              716, 722 (Tex.Civ.App.-Dallas 1979, no writ). Major
basis for their DTPA claim.                                        Help also failed to file a motion for new trial to preserve
                                                                   its excessive-damages complaint. See Tex.R.Civ.P.
*5 Major Help further contends that the Lawyers                    324(b)(4). In no way was the trial court given an
presented no evidence that the television advertisements           opportunity to address or correct the alleged error.
violated the State Bar of Texas rules, that Major Help
failed to expend a certain amount of funds for the                 In its fourth issue, Major Help argues that the Lawyers
purchase of air time, that Major Help modified the                 presented no competent evidence to establish that their
advertising schedule, and that Major Help improperly               attorneys’ fees were reasonable and necessary. Again,
screened phone calls. We disagree.                                 Major Help has failed to preserve this error for appeal.
                                                                   Major Help’s motion for instructed verdict did not address
First, it was not necessary for the Lawyers to prove that          this alleged lack of evidence. See Tex.R.Civ.P. 268;
the advertisement violated State Bar rules or that Major           Steves Sash & Door, 751 S.W.2d at 477. Nor did Major
Help’s method of answering phone calls was improper in             Help make any other attempt to preserve this issue by
order to prevail on their DTPA claim. Rather, the                  bringing it to the trial court’s attention. Therefore, we
Lawyers’ claim is that Major Help engaged in false,                hold that issues three and four were not preserved for
misleading, or deceptive acts that induced the Lawyers to          appeal.
enter the Agreement. We hold that more than a scintilla of
evidence exists to support the Lawyers’ claims, including
misrepresentations regarding the manner in which Major
Help would answer phone calls, alleged State Bar
approval of the advertisements, the amount of funds                                     CONCLUSION
Major Help would expend on the purchase of air time,
and the advertising schedule it would run. Because we              *6 Because we determine that the forum selection clause
find legally sufficient evidence that Major Help violated          did not apply to the Lawyers’ DTPA claim, we hold the
the DTPA by several misrepresentations, we overrule                trial court did not err in denying Major Help’s motion to
appellant’s second issue.                                          dismiss. We further hold that the evidence is legally
                                                                   sufficient to support a violation of the DTPA and that
                                                                   Major Help failed to preserve its complaints about double
                                                                   recovery and attorneys’ fees for appeal. We therefore
III. Double Recovery and Unreasonable Attorneys’                   affirm the trial court’s judgment.
Fees
In its third issue, Major Help argues that the evidence
does not support recovery from both Major Help and its
                                                                   All Citations
representative Berz and that assessing damages against
both amounts to a double recovery for the same injury.             Not Reported in S.W.3d, 2000 WL 298282
Major Help requests that this Court reform the judgment
to clarify that Major Help and Berz are jointly and

Footnotes
1      Appellees include Ivy, Crews & Elliot, P.C.; Guy C. Fisher, Esq .; Earl K. Straight, Esq.; Richard T. Jones, Esq.; James
       P. Borne, Esq.; and McGraw, Brinkley & Irwin. For convenience, we will refer to appellees as the Lawyers.

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2      Ultimately only six lawyers or law firms participated in the advertising arrangement.

3      The forum selection clause provided: “Any action brought by either party under this agreement shall be instituted only
       in a court in the County of Los Angeles in the State of California having the appropriate monetary limits of jurisdiction.”
4      We will refer to the appellants collectively as Major Help because their claims on appeal are identical, except as
       addressed in note 5.
5      Since we hold that the trial court was correct in deciding not to apply the forum selection clause, we reject the
       argument that at least the action against Berz should be dismissed because as a mere participant in the transaction,
       he derives some added benefit from the forum selection clause.




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Osornia v. AmeriMex Motor & Controls, Inc., 367 S.W.3d 707 (2012)




                                                     367 S.W.3d 707
                                                 Court of Appeals of Texas,
                                                   Houston (14th Dist.).

                                        Fernando OSORNIA, Appellant,
                                                    v.
                                 AMERIMEX MOTORS & CONTROLS, INC., Appellee.

                                        No. 14–11–00086–CV. | March 29, 2012.



Synopsis
Background: Mud pump motors vendor filed suit against its principal and officer and against principal and officer of
offshore rig’s project manager, asserting claims for fraud, violations of Texas Theft Liability Act, and tortious interference
with contract. The 152nd District Court, Harris County, Robert K. Schaffer, J., denied motion by vendor’s principal/officer to
compel arbitration pursuant to settlement agreement entered into in prior lawsuit that required all claims arising out of
settlement to be submitted to arbitration. Vendor’s principal/officer appealed.



Holdings: The Court of Appeals, Kem Thompson Frost, J., held that:
[1]
   vendor’s claims that were assigned to it by offshore rig against principal/officer did not fall within scope of arbitration
clause of settlement agreement, and
[2]
   issue of validity of rig’s assignment went to the merits of claims and therefore was not relevant to determining propriety of
the denial of application to compel arbitration.


Affirmed.


Attorneys and Law Firms

*708 Lee Keller King, Houston, for appellant.

Steve E. Couch, Charles W. Kelly, Houston, for appellee.

Panel consists of Justices FROST, SEYMORE, and JAMISON.




                                                          OPINION


KEM THOMPSON FROST, Justice.

This is an interlocutory appeal from the trial court’s order denying a defendant’s application to compel arbitration under
Texas Civil Practice and Remedies Code section 171.021. Because the claims asserted against the defendant by the plaintiff

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do not fall within the scope of the arbitration agreement, the trial court did not err in refusing to compel arbitration, and we
affirm the trial court’s order.




                                  I. FACTUAL AND PROCEDURAL BACKGROUND

In 2008, appellee/plaintiff AmeriMex Motor & Controls, Inc. and others filed suit against appellant/defendant Fernando *709
Osornia and others in Cause No. 2008–56215 in the 152nd District Court of Harris County (hereinafter the “First Lawsuit”).
In late October and early November of 2009, the parties to that lawsuit and other “Potential Parties” entered into a “Mutual
Release and Settlement Agreement” (hereinafter “Settlement Agreement”). The parties to that agreement agreed that “any
and all claims arising out of this Agreement ... shall be arbitrated.” Viking Offshore (USA), Inc. was not a party in the First
Lawsuit, nor was Viking a party to the Settlement Agreement, which contains no reference to Viking.

AmeriMex alleges that in June 2010, Viking assigned to AmeriMex any and all claims that Viking had against Osornia and
Daniel Becker (the “Assigned Claims”). In August 2010, AmeriMex filed suit in the trial court below against Osornia and
Becker (hereinafter the “Second Lawsuit”), alleging, in pertinent part, as follows:

     • In October 2006, Becker was a principal and officer of Odin Rig Services, Inc. Odin was working under a contract
     with Viking to do the project management on an upgrade of the “VIKING PRODUCER,” a semi-submersible rig.

     • During that same time period, Osornia was an officer and principal of AmeriMex. Becker was aware of Osornia’s
     position with AmeriMex.

     • Odin’s only business was fulfilling the rig upgrade of the VIKING PRODUCER. Under the contract between Viking
     and Odin, Odin was responsible for managing this project.

     • Viking gave Odin substantial discretion to determine what was necessary to complete the project.

     • In October 2006, Becker was in charge of this project for Odin. Becker’s major responsibilities were the acquisition of
     the capital drilling equipment for the vessel.

     • It was Becker’s responsibility to select the vendor from whom to buy the capital equipment to be installed on the
     VIKING PRODUCER. Viking’s budget for the project was based upon Becker’s recommendations.

     • Becker needed to buy six mud pump motors and three “draw work motors” for installation on the VIKING
     PRODUCER.

     • AmeriMex is in the business of manufacturing and selling motors that can be used for mud pumps and draw works on
     drilling rigs. Osornia and Becker conspired to cause AmeriMex to assume contractual risks for the nine motors by a
     series of maneuvers.

     • First, contrary to proper commercial practices, Becker, rather than the vendor AmeriMex, prepared the quotation for
     the nine motors.

     • Second, when Becker issued the quotation, Osornia and Becker caused the quotation to come from a Mexican
     company known as Motor Power Services S.A. de C.V. (hereinafter “Motor Power”). Motor Power was used as a
     vehicle for illegal activity that substantially damaged AmeriMex in other transactions.

     • When Becker caused Odin to issue the purchase order for the motors, he identified the vendor as Motor Power. There
     was no commercial relationship between Motor Power and AmeriMex, other than Osornia’s use of Motor Power as a
     vehicle to commit crimes and cheat AmeriMex out of funds properly due it.

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     • Becker was acting in the course and scope of his employment for Odin, which was in the course and scope of its
     employment for Viking. Becker *710 knowingly participated in the fraudulent construction of the transaction.

     • Becker has testified that he considered the vendor to be AmeriMex at all material times.

     • AmeriMex procured or manufactured the motors for sale to Viking. When it was time to pay for the motors, Becker, on
     behalf of Odin, participated in a conspiracy with Osornia to deprive AmeriMex of receipt of its funds for the nine
     motors and to divert the funds to Motor Power.

     • Becker authored an email dated December 23, 2006, in which he advised Osornia to lie to Odin about why payments
     were going to Motor Power. The lie that Becker concocted was for Osornia to claim that Motor Power was a subsidiary
     of AmeriMex. Motor Power has never been a subsidiary of AmeriMex, and Becker knew this statement was false when
     he made it.

     • Becker continued on behalf of Odin, which, in turn, was acting on behalf of Viking, to take affirmative actions to cheat
     AmeriMex out of its money by rushing the checks through the normal pay process and making them payable to Motor
     Power.

     • Motor Power’s Alejandro Moeller actively conspired with Becker and Osornia to deprive AmeriMex of its funds.

     • On January 8,1 Becker caused Viking to pay Motor Power $130,500 for the draw works motors and $261,000 for the
     mud pump motors.


     • Because of the conduct of Becker and Osornia, Viking did not receive the six mud pump motors for which it paid
     Motor Power.

          • Becker has testified that he caused Viking to pay the wrong party.

          • Osornia has testified that Motor Power paid him a “kickback” of $1,000 for each motor for which Motor Power
          received payment.

          • For good and sufficient consideration, Viking assigned its claims against Becker and Osornia to AmeriMex.
Based upon these allegations and as assignee of Viking, AmeriMex has asserted claims against Osornia for fraud, violations
of the Texas Theft Liability Act, and tortious interference with contractual relations. As assignee, AmeriMex also asserted
claims against Becker for fraud and tortious interference with contractual relations. On its own behalf, AmeriMex asserted
tort claims against Becker.

Osornia filed an application to compel arbitration, arguing that AmeriMex’s claims against Osornia fall within the scope of
the Settlement Agreement’s arbitration clause. The trial court initially granted Osornia’s application but later reconsidered
that ruling and issued an order denying the application. The trial court denied Becker’s motion to compel arbitration. Osornia
filed this interlocutory appeal from the denial of his application to compel arbitration. Becker did not file an interlocutory
appeal.




                                                   II. ISSUES PRESENTED

Osornia presents two appellate issues. In his first issue, Osornia asserts that the trial court erred in denying his application to
compel arbitration. In his second issue, Osornia asserts that the alleged assignment of claims by Viking to AmeriMex is void
and unenforceable as against public policy.


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                                               III. STANDARD OF REVIEW

It is undisputed that Osornia and AmeriMex entered into the Settlement Agreement, and no party has challenged the validity
of that agreement or its arbitration *711 clause. Whether this clause imposes a duty upon AmeriMex to arbitrate its claims
against Osornia in the Second Lawsuit is a matter of contract interpretation and a question of law for the trial court. See
IKON Office Solutions, Inc. v. Eifert, 2 S.W.3d 688, 694 (Tex.App.-Houston [14th Dist.] 1999, no pet.). We review the trial
court’s legal determination in this regard under a de novo standard of review. See id.




                                                        IV. ANALYSIS


A. Did the trial court err in denying the application to compel arbitration?
[1]
   We first examine whether the trial court erred in denying Osornia’s application to compel arbitration. The Settlement
Agreement is silent as to whether its arbitration clause is governed by the Federal Arbitration Act (“Federal Act”) or the
Texas General Arbitration Act (“Texas Act”). Osornia asserts that the Texas Act applies, and AmeriMex does not contest this
assertion. Neither party asserts that the Federal Act applies or that it preempts any aspect of the Texas Act relevant to this
case. In this situation, we need not address whether the Federal Act applies, and we treat this case as one under the Texas Act.
See Bates v. MTH Homes–Texas, L.P., 177 S.W.3d 419, 421 (Tex.App.-Houston [1st Dist.] 2005, no pet.). Even so, because
the substantive principles applicable to the analysis in this appeal are the same under both the Federal Act and the Texas Act,
we cite in this opinion cases under the Federal Act and Texas Act without stating under which statute the cases were decided.
See Forest Oil Corp. v. McAllen, 268 S.W.3d 51, 56, n. 10 (Tex.2008).
[2]
   A party seeking to compel arbitration must establish that (1) a valid arbitration agreement exists2 and (2) the claims at issue
are within the scope of the agreement. See In re D. Wilson Const. Co., 196 S.W.3d 774, 780–81 (Tex.2006) (orig.
proceeding); In re Igloo Prods. Corp., 238 S.W.3d 574, 577 (Tex.App.-Houston [14th Dist.] 2007, orig. proceeding [mand.
denied] ). If these two showings are made, the burden shifts to the party opposing arbitration to present a valid defense to the
agreement, and absent evidence supporting such a defense, the trial court must compel arbitration. See J.M. Davidson, Inc. v.
Webster, 128 S.W.3d 223, 227–28 (Tex.2003); In re J.D. Edwards World Solutions Co., 87 S.W.3d 546, 549 (Tex.2002)
(orig. proceeding); In re Igloo Prods. Corp., 238 S.W.3d at 577.

It is undisputed that Osornia and AmeriMex signed and entered into the Settlement Agreement, and no party has challenged
the validity of that agreement or its arbitration clause. Nonetheless, AmeriMex argues that Osornia failed to establish the
existence of an arbitration agreement. AmeriMex notes that (1) AmeriMex only asserts claims against Osornia as assignee of
Viking, (2) AmeriMex could have asserted the Assigned Claims in Viking’s name; and (3) there is no evidence of any
arbitration agreement between Osornia and Viking. Still, AmeriMex chose to bring suit in its own name, and AmeriMex is
asserting claims against Osornia, albeit as assignee of Viking. In this context, we conclude that Osornia carried his burden of
establishing the existence of a valid arbitration agreement between the relevant parties—AmeriMex and Osornia.

Given the existence of a valid agreement to arbitrate, the next issue is whether AmeriMex’s *712 claims against Osornia are
within the scope of the Settlement Agreement’s arbitration clause. That clause reads in its entirety as follows:
             The Parties to this Agreement agree that any and all claims arising out of this Agreement, including
             any misrepresentations or warranties (including disputes and interpretations), shall be arbitrated before
             Judge Caroline Baker. If she is unwilling or unable to serve as arbitrator, the Parties shall agree to an
             arbitrator who has served as a former State District Judge [sic] or, if no agreement can be reached, an
             arbitrator shall be appointed by a Court of competent jurisdiction.3


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[3] [4] [5] [6] [7]
              Any doubts as to whether AmeriMex’s claims against Osornia fall within the scope of the arbitration clause must
be resolved in favor of arbitration. See Prudential Sec. Inc. v. Marshall, 909 S.W.2d 896, 899 (Tex.1995). A court should not
deny arbitration unless the court can say with positive assurance that an arbitration clause is not susceptible of an
interpretation that would cover the claims at issue. Id. In determining whether a claim falls within the scope of an arbitration
agreement, we focus on AmeriMex’s factual allegations, rather than the legal claims asserted by AmeriMex. Id. at 900. The
presumption of arbitrability is particularly applicable when the clause is broad; that is, it provides for arbitration of “any
dispute arising between the parties,” or “any controversy or claim arising out of or relating to the contract thereof,” or “any
controversy concerning the interpretation, performance or application of the contract.” See Babcock & Wilcox Co. v. PMAC,
Ltd., 863 S.W.2d 225, 230 (Tex.App.-Houston [14th Dist.] 1993, writ denied). We presume for the purposes of our analysis
that the Settlement Agreement’s arbitration clause is broad. In such instances, absent any express provision excluding a
particular grievance from arbitration, only the most forceful evidence of purpose to exclude the claim from arbitration can
prevail, and AmeriMex has the burden of showing that its claims against Osornia fall outside the scope of the arbitration
clause. See Marshall, 909 S.W.2d at 900; Babcock & Wilcox Co., 863 S.W.2d at 230. Nonetheless, the strong policy in favor
of arbitration cannot serve to stretch a contractual clause beyond the scope intended by the parties or to allow modification of
the unambiguous meaning of the arbitration clause. See IKON Office Solutions, Inc., 2 S.W.3d at 697.

Under the unambiguous language of the arbitration clause, AmeriMex and Osornia have agreed to arbitrate all claims arising
out of the Settlement Agreement. The parties did not agree to arbitrate all claims “relating to” or “connected with” the
Settlement Agreement. Nor did the parties agree to arbitrate all claims “arising out of” or “relating to” the First Lawsuit or
the occurrence giving rise to this lawsuit. Notably, Viking was not a party to the First Lawsuit or to the Settlement
Agreement, and no reference is made to Viking in the Settlement Agreement. Focusing on the factual allegations in
AmeriMex’s live pleading, we note the following:

       • AmeriMex does not refer to the First Lawsuit or to the Settlement Agreement.

       • AmeriMex does not allege that Osornia breached the Settlement Agreement or any other contract.

       • AmeriMex does not allege that there is any dispute over the interpretation of the Settlement Agreement.

       *713 • AmeriMex alleges tortious conduct by Becker and Osornia that allegedly occurred before the Settlement
       Agreement was signed in 2009.

       • AmeriMex does not allege any tortious conduct that is alleged to have occurred after the Settlement Agreement was
       signed.

AmeriMex alleges that, after the Settlement Agreement was signed, Viking assigned its claims against Osornia to AmeriMex.
As alleged assignee of Viking, AmeriMex asserts three tort claims against Osornia. Assigned tort claims based upon conduct
that allegedly occurred before the Settlement Agreement was signed are simply not claims “arising out of” the Settlement
Agreement. See Washburn v. Societe Commerciale de Reassurance, 831 F.2d 149, 150–52 (7th Cir.1987) (holding that
claims based upon allegedly tortious conduct in which defendants allegedly used various agreements and other devices to
defraud various individuals did not fall within agreement to arbitrate disputes with respect to the interpretation of one of the
agreements or a party’s performance under that agreement); Texaco, Inc. v. American Trading Transp. Co., 644 F.2d 1152,
1154 (5th Cir.1981) (holding that tort claims based upon the defendants’ alleged conduct that allegedly caused damages to
plaintiff’s dock did not fall within agreement by plaintiff to arbitrate all disputes “arising out of” a time charter by the
plaintiff of one of the vessels); Coffman v. Provost * Umphrey Law Firm, L.L.P., 161 F.Supp.2d 720, 724–30 (E.D.Tex.2001)
(denying motion to compel arbitration and holding that claims based upon breaches of prior partnership agreements, that
allegedly occurred before any arbitration clause was in effect, did not fall within clause in which plaintiff agreed to arbitrate
all claims “arising under” subsequent partnership agreements). We harbor no doubts as to whether AmeriMex’s claims
against Osornia fall within the scope of the arbitration clause, and this court can say with positive assurance that the
arbitration clause is not susceptible of an interpretation that would cover AmeriMex’s claims against Osornia. See Washburn,
831 F.2d at 150–52; Texaco, Inc., 644 F.2d at 1154; Coffman, 161 F.Supp.2d at 724–30. We conclude that AmeriMex
satisfied its burden of showing that its claims against Osornia fall outside the scope of the arbitration clause.

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Osornia relies upon a line of cases containing language to the effect that “ ‘if the facts alleged ‘touch matters,’ have a
‘significant relationship’ to, are ‘inextricably enmeshed’ with, or are ‘factually intertwined’ with the contract that is subject to
the arbitration agreement, the claim will be arbitrable.’ ” AutoNation USA Corp. v. Leroy, 105 S.W.3d 190, 195 (Tex.App.-
Houston [14th Dist.] 2003, no pet.) (quoting Pennzoil Co. v. Arnold, 30 S.W.3d 494, 498 (Tex.App.-San Antonio 2000, no
pet.)). Significantly, the cases in which this formulation4 has been utilized have involved very broad arbitration clauses in
which the parties agree to arbitrate all claims arising out of or relating to a contract or in which the parties agree to arbitrate
all disputes that may arise among them. See In re Prudential Securities, Inc., 159 S.W.3d 279, 281, 283–84 (Tex.App.-
Houston [14th Dist.] 2005, orig. proceeding); In re BP America Production Co., 97 S.W.3d 366, 370–71 (Tex.App.-Houston
[14th Dist.] 2003, orig. proceeding); AutoNation USA *714 Corp., 105 S.W.3d at 195–96; Arnold, 30 S.W.3d at 498–99;
Hou–Scape, Inc. v. Lloyd, 945 S.W.2d 202, 205–06 (Tex.App.-Houston [1st Dist.] 1997, orig. proceeding); Fridl v. Cook,
908 S.W.2d 507, 510–13 (Tex.App.-El Paso 1995, writ dism’d w.o.j.). Though we have presumed that the arbitration clause
in the Settlement Agreement is broad, it is not as broad as the clauses involved in the cases resting upon this formulation.
Therefore, this line of cases is not on point. If we followed this formulation in the case under review, we would
impermissibly expand the scope of the arbitration clause beyond the plain meaning of “any and all claims arising out of this
Agreement.” See IKON Office Solutions, Inc., 2 S.W.3d at 697.

Osornia also argues that this court cannot conclude that AmeriMex’s claims are outside the scope of the arbitration clause
unless this court concludes with positive assurance that the claims are not “factually intertwined” with arbitrable claims. In
support of this argument, Osornia cites the following sentence from Prudential Securities, Inc. v. Marshall: “On this record,
we cannot conclude with positive assurance that the statements at issue here are not at least ‘factually intertwined’ with the
arbitrable claims.” 909 S.W.2d 896, 900 (Tex.1995) (per curiam). In Marshall, the Supreme Court of Texas held that various
defamation claims asserted by two former stockbrokers against their former employer fell within the scope of arbitration
agreements in which the stockbrokers agreed to arbitrate all controversies with the former employer arising out of the
employment or termination of employment of the respective stockbrokers. See id. at 897–900. The claims based upon the
alleged defamatory statements fell within the scope of the arbitration agreements without the need to rely upon a conclusion
that the claims were factually intertwined with arbitrable claims. See id.

The better reading of the Marshall opinion is that it does not stand for the broad proposition that, when no other claims
between the parties are being sent to arbitration, a claim that does not fall within the language of an arbitration clause still
must be arbitrated unless the court can say with positive assurance that the claim is not “factually intertwined” with the
arbitrable claims. See id. Significantly, in various cases the Supreme Court of Texas has relied upon the legal standard in
Marshall, yet in none of them has the high court described the “factually intertwined” standard advanced by Osornia. See,
e.g., In re Rubiola, 334 S.W.3d 220, 223–24 (Tex.2011) (stating the legal standard from Marshall without mentioning the
“factually intertwined” language upon which Osornia relies). In addition, this court has held that claims did not fall within the
scope of an arbitration agreement without addressing whether the claims were “factually intertwined” with arbitrable claims.
See In re Igloo Prods. Corp., 238 S.W.3d at 581; IKON Office Solutions, Inc., 2 S.W.3d at 693–97. In the context of this
case, to conclude that AmeriMex’s claims are outside the scope of the arbitration clause, it is unnecessary for this court to
determine whether it can conclude with positive assurance that these claims are not “factually intertwined” with arbitrable
claims.5 See In re Rubiola, 334 S.W.3d at 223–24.

*715 Under the applicable standard of review, we conclude that the trial court did not err in denying Osornia’s application to
compel arbitration.6 Accordingly, we overrule Osornia’s first issue.



B. Is the issue of whether the assignment is void relevant to this appeal?
[8]
    In his second issue, Osornia argues that the alleged assignment of claims by Viking to AmeriMex is void because it is
contrary to public policy. Therefore, Osornia asserts, this court should sustain his second issue, reverse the trial court’s order,
and render a take-nothing judgment against AmeriMex on its claims against Osornia. As part of the allegations in its live
pleading, AmeriMex asserts that Viking assigned its claims against Becker and Osornia to AmeriMex. To succeed on the
merits, AmeriMex will have to prove this assignment, and in responding on the merits Osornia is free to assert any argument
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he wishes, including that the assignment is void. But, the merits of AmeriMex’s claims are not relevant to determining
whether the trial court erred in denying Osornia’s application to compel arbitration. See AT & T Techs., Inc. v.
Communications Workers of Am., 475 U.S. 643, 649–50, 106 S.Ct. 1415, 1419, 89 L.Ed.2d 648 (1986); Universal Computer
Systems, Inc. v. Dealer Solutions, L.L.C, 183 S.W.3d 741, 749 (Tex.App.-Houston [1st Dist.] 2005, pet. denied).
Accordingly, we overrule Osornia’s second issue.




                                                           V. CONCLUSION

As Viking’s assignee, AmeriMex asserts tort claims against Osornia. These claims are based upon conduct that allegedly
occurred before the Settlement Agreement was signed. We harbor no doubts as to whether AmeriMex’s claims against
Osornia fall within the scope of the arbitration clause, and this court can say with positive assurance that the arbitration
clause is not susceptible of an interpretation that would cover AmeriMex’s claims against Osornia. These claims are not
claims “arising out of” the Settlement Agreement. AmeriMex satisfied its burden of showing that its claims against Osornia
fall outside the scope of the arbitration clause. Whether the alleged assignment is void is not an issue relevant to determining
whether AmeriMex must arbitrate these claims. Accordingly, because these claims are not within the scope of the arbitration
clause, AmeriMex cannot be compelled to arbitrate them.

The trial court’s order is affirmed.



All Citations

367 S.W.3d 707

Footnotes
1
       AmeriMex does not specify a year in this allegation.

2
       If all relevant parties did not sign the contract in which the arbitration agreement is found, this first prong may include issues as to
       whether a non-signatory is bound by or may enforce the arbitration agreement. See In re Rubiola, 334 S.W.3d 220, 223–24
       (Tex.2011). Such issues are not present in this appeal.
3
       This clause does not contain any provision in which the parties agree that the arbitrator, rather than the courts, shall determine
       disputes regarding the scope of the arbitration clause. See Forest Oil Corp. v. McAllen, 268 S.W.3d 51, 61 (Tex.2008).
4
       Under this formulation, courts also note that “if the facts alleged in support of the claim stand alone, are completely independent of
       the contract, and the claim could be maintained without reference to the contract, the claim is not subject to arbitration.” See
       AutoNation USA Corp., 105 S.W.3d at 195 (quoting Arnold, 30 S.W.3d at 498).
5
       In Jack B. Anglin Co. v. Tipps, the Supreme Court of Texas concluded that because the breach-of-contract claim between the
       parties was going to be arbitrated and because certain tort claims were factually intertwined with the breach-of-contract claim, the
       tort claims should be arbitrated to avoid multiple determinations of the same matter. See 842 S.W.2d 266, 271 (Tex.1992). This
       case is not on point because this doctrine only applies when at least one claim between the parties is already going to arbitration.
       See In re Weekley Homes, L.P., 180 S.W.3d 127, 132 & n. 25 (Tex.2005); In re Prudential Securities, Inc., 159 S.W.3d at 281–84.
6
       Osornia also argues that AmeriMex had notice of Viking’s claims against Osornia and Becker before AmeriMex signed the
       Settlement Agreement. Any such notice is not relevant to whether the claims that AmeriMex asserts against Osornia in the Second
       Lawsuit are within the scope of the arbitration clause.




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                                                                                                                      FILED
                                                                                                          DALLAS COUNTY
                                                                                                       8/25/2015 4:11:50 PM
                                                                                                             FELICIA PITRE
                                        MARCUS & SHAPIRA LLP                                              DISTRICT CLERK

                                            ONE OXFORD CENTRE, 35TH FLOOR
                                                  301 GRANT STREET
                                         PITTSBURGH, PENNSYLVANIA 15219-6401
                                                     (412) 471-3490
                                                         ______

                                                   Fax: (412) 391-8758
SCOTT D. LIVINGSTON
Email: Livingston@marcus-shapira.com
Direct Dial: (412) 338-4690

                                                August 25, 2015

Via ECF and Hand Delivery

Honorable Martin Hoffman
George L. Allen, Sr. Courts Building
68th District Court
600 Commerce St., 5th Floor
Dallas, Texas 75202

           Re:        Cause No. DC-15-03853; Dickson Perry, derivatively on behalf of Excentus
                      Corporation v. Brandon Logsdon, et al.; in the 68th Judicial District Court of
                      Dallas County, Texas

Dear Judge Hoffman:

         Plaintiff Dickson Perry (“Plaintiff” or “Perry”) does not dispute—nor can he dispute—
that the 2004 and 2005 Excentus/Giant Eagle stock purchase agreements (the “SP Agreements”)
provide a potential defense to his claims against Giant Eagle. As Perry acknowledges, the
Excentus/Giant Eagle settlement agreement (the “Settlement Agreement”)(attached as Exhibit A)
forms the “nucleus” of his claims against Giant Eagle because they all depend on proof that the
Settlement Agreement was a “complete capitulation of Excentus’ interests.” Perry PowerPoint
Slide No. 5 (attached as Exhibit B). But whether the Settlement Agreement was a good deal or a
bad deal for Excentus depends, in turn, on the strength of Giant Eagle’s defenses in the original
litigation. Giant Eagle’s principal defense in that litigation was, of course, based on the license
and other key provisions in the SP Agreements. This leaves only one question for this Court to
decide—whether a defense based on the SP Agreements is enough to trigger the forum selection
clause in those agreements.

        Judge Boyle held that a defense was enough. In analyzing the plain language of the
forum selection clause, Judge Boyle rejected Excentus’ argument that a mere defense based on
the SP Agreements could not “arise out of” those agreements. Excentus Corp. v. Giant Eagle,
Inc., 2012 WL 2525594, at *4 (N.D. Tex. 2012) (Tab 17, Giant Eagle case law hearing binder).
Judge Boyle also made clear that the forum selection clause applies where, as here, a “defense
requires the Court to interpret the Stock Purchase Agreements.” Id. This Court should not re-
interpret the forum selection clause in the SP Agreements. In accordance with stare decisis, this
Court should follow Judge Boyle’s interpretation of the forum selection clause in the SP
Agreements—i.e., that clause is triggered whenever those agreements provide a possible defense.
Under Texas law, “once a definitive construction has been given to a specific writing [whether
by a state or federal court]… such a definite determination is binding and conclusive in
subsequent suits [under] [t]he doctrine of stare decisis.” Robbin v. HNG Oil Inc., 878 S.W.2d

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Honorable Martin Hoffman
August 25, 2015
Page 2

351, 361 (Tex. App. 1994)(applying stare decisis to federal court decision interpreting a property
deed)1

        Perry’s reliance on Texas state court decisions allegedly interpreting the phrase “arising
out of” narrowly is misplaced. Not one of those decisions actually interprets the phrase “any
action arising out of” found in the forum selection clause at issue, language which judges in both
Texas and Pennsylvania found must be broadly construed. Equally significant, not one of those
decisions addresses the issue presented here (and decided by Judge Boyle)—whether the
assertion of a defense based on an agreement that contains a forum selection clause satisfies the
arising under requirement. Judge Boyle did not go out on a limb when she interpreted the
“arising out of” language in the forum selection to include a defense under the SP Agreements.
In Omron Healthcare, Inc. v. Maclaren Exports Ltd., 28 F.3d 600, 601-02 (7th Cir. 1994), the
Seventh Circuit held that “all disputes the resolution of which arguably depend on the
construction of an agreement ‘arise out of’ that agreement” for the purposes of enforcing a forum
selection clause. Other courts have interpreted “arising out of” in precisely the same way when
enforcing a forum selection clause. Interactive Music Tech., LLC v. Roland Corp. U.S., No.
CIV.A. 6:07-CV-282, 2008 WL 245142, at *6-7 (E.D. Tex. Jan. 29, 2008); Skold v. Galderma
Lab., L.P., 2015 WL 1740032 at *15-17 (E.D. Pa. 2015). That is not all. None of the cases cites
by Perry involve a plaintiff whose claims attack a settlement agreement that by its terms directly
revives and implicates the agreements containing the forum selection clause at issue. (Exhibit
A at Article 5). Perry cannot avoid the “nucleus” of the parties’ relationship. “No matter how
[Perry] characterizes or artfully pleads [his] claims, the claims and alleged damages arise from
the contractual relationship between the parties, not from general obligations imposed by law.”
In re Int’l Profit Associates, Inc., 274 S.W.3d 672, 678 (Tex. 2009) (Tab 29).

        The dispute resolution clause in the Settlement Agreement is a complete red herring.
That clause requires all disputes “arising out of” the Settlement Agreement to be arbitrated. But
as Perry acknowledges, he has no desire to arbitrate and thus has waived any right he may have
had to do so. Leibowitz v. Sequoia Real Estate Holdings L.P., 2015 WL 3451675, at 17 (Tex.
App.—Dallas 2015)(“Because neither side demanded arbitration, the parties waived their right to
have the dispute determined by an arbitration panel.”). Thus, the parties well understood that
this dispute would lead once again to the SP Agreements. This Court should apply the mutually
inconvenient forum selection clause in the SP Agreements, just as the parties intended.

                                                        Respectfully Submitted,



                                                        Scott D. Livingston

cc:        All counsel of record (via ECF & email)


1
    Robbin and other newly cited cases are attached as Exhibit C.

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                               EXHIBIT B
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                                             R386
Robbins v. HNG Oil Co., 878 S.W.2d 351 (1994)



                                                               written instrument is not ambiguous and
                                                               parol evidence will not be received
       Original Image of 878 S.W.2d 351 (PDF)                  to create ambiguity or to give written
                   878 S.W.2d 351                              instrument different meaning from that
               Court of Appeals of Texas,                      which its own language and wording
                      Beaumont.                                imparts.

              Jewell ROBBINS, Appellant,                       Cases that cite this headnote
                              v.
        HNG OIL COMPANY, et al., Appellees.
                                                         (3)   Evidence
       No. 09-93-107 CV.      Submitted                            Grounds for Exclusion of Extrinsic
                                                               Evidence
   Jan. 13, 1994. I Decided June 23, 1994.
                                                               Parol evidence rule prevails even to extent
Attorney-in-fact of grantee's heir brought action              to prohibiting proof of circumstances
against oil companies seeking to recover unpaid                surrounding transaction when written
mineral royalties for property in Spindletop oil field         instrument involved is so worded that
allegedly conveyed to grantee in 1911 deed. The 136th          it is not fairly susceptible to more
District Court, Jefferson County, Jack R. King, J.,            than one legal meaning or construction;
granted summary judgment in favor of defendant, and            no intention, however discovered, can
plaintiff appealed. The Court of Appeals, Brookshire,          contradict or destroy legal effect of
J., held that: (1) deed conveyed only four properties          wording and language used.
specifically named in deed, and (2) decision in prior
federal action concerning same property had collateral         Cases that cite this headnote
estoppel effect.
                                                         [4]   Deeds
Affirmed.                                                          Questions for Jury
                                                               Identity of land conveyed by deed was
                                                               question of law for court, rather than
 \Vest Headnotes ( 16)                                         mixed question oflaw and fact required to
                                                               be determined by jury, where provision of
                                                               deed unambiguously identified four tracts
 [11       Deeds                                               to be conveyed.
               Particular Words or Tenns
           Recitation in deed that it conveyed all             Cases that cite this headnote
           property inherited through decedent could
           not operate to enlarge specific description   (5)   Judgment
           given in deed of property conveyed.                     Operation and EtTect
           l Cases that cite this headnote                     Determination in federal action brought
                                                               by plaintiff on behalf of grantee's heirs
                                                               that 1911 deed conveyed to grantee only
 [2]       Evidence                                            four specifically named tracts contained
               Grounds for Exclusion of Extrinsic              in deed, had collateral estoppel effect in
           Evidence                                            plaintiffs subsequent state action brought
           If written instrument is so worded                  in her capacity as attorney-in-fact for one
           that same can be given certain and                  of grantee's heirs.
           defmite legal meaning or interpretation
           or construction by applying relevant,               Cases that cite this headnote
           pertinent rules of construction, then



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 [6]   Judgment                                             1 Cases that cite this headnote
            !viutuality of Estoppel
       .Judgment                                     (10]   Courts
             1\:lutuality of Estoppel in General                 Decisions of Higher Court or Court
       Mutuality was not required for application           of Last Resort
       of doctrine of collateral estoppel.                  When reviewing court with jurisdiction
                                                            sets forth final ruling on matter of
        l Cases that cite this headnote
                                                            law before appellate court, then such
                                                            ruling and determination is binding
 171    Evidence                                            and conclusive in all subsequent suits
             Deeds                                          involving same subject matter, whether
        Evidence                                            parties and property are the same or not.
             Contracts in General
                                                            1 Cases that cite this headnote
       Under Texas law, parol evidence will
       not be received or admitted to create
       ambiguity or to give contract or deed         (11)   Courts
       meaning different from that which its                    Decisions ofUnited States Courts as
       language imparts.                                    Authority in State Courts
                                                            Determination by federal court that deed
       2 Cases that cite this headnote                      conveyed only four parcels of property
                                                            was stare decisis in subsequent state court
 [81   Courts                                               action seeking to construe same deed.
            Previous Decisions as Controlling or
                                                            Cases that cite this headnote
       as Precedents
       Once defmitive construction has been
       given to specific writing or particular       [12]   Judgment
       specified fact situation such as                          Identity of Su~ject-Matter
       determination of true construction of                Doctrine of issue preclusion barred
       will or validity of deed, such definite              relitigation in state court of issue of
       determination is binding and conclusive              whether deed conveyed more than four
       in subsequent suits involving same                   parcels specifically named in deed after
       subject matter and same deed, whether                federal court construed and determined
       parties and property are the same or                 exact effect of deed.
       not; doctrine of stare decisis controls the
       result.                                              l Cases that cite this headnote

       2 Cases that cite this headnote
                                                     [131   Judgment
                                                             ~   Identity of Subject-1\:latter
 [91   Courts                                               Judgment
            Previous Decisions as Controlling or                 Identity ofissues, in General
       as Precedents
                                                            "Issue preclusion," or "preclusion by
       Doctrine of stare decisis gives force of             judgment," bars relitigation of identical
       law to precedents and is broader in its              questions of fact or law that were actually
       scope than doctrine of collateral estoppel;          litigated and which questions of fact or
       commonality or privity among parties to              law were essential to judgment in prior
       present or prior litigation is not required          suits.
       by stare decisis.


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Robbins v. HNG Oil Co., 878 S.W.2d 351 (1994)




        l Cases that cite this headnote               John G. Tucker, Orgain, Bell & Tucker, Beaumont,
                                                      Ronald G. Manning, Pogo Producing Co., Houston, for
                                                      appellee.
 [14]   Deeds
            Evidence                                  Before WA.LKER, C.J., and BROOKSIDRE and
        Grantee's successor failed to establish       BURGESS, JJ.
        complete and proper chain of title for
        three parcels named in deed, where deed
        recited that it was conveying property                              OPINION
        inherited from decedent, and three of
        those tracts did not appear in inventory of   BROOKSIDRE, Justice.
        decedent's estate.
                                                      Appellant, Jewell Robbins, individually and as
        Cases that cite this headnote                 attorney-in-fact for Abigail Meaders, timely appealed
                                                      from the granting of a summary judgment. Robbins
                                                      contends that Abigail Meaders is the heir of James
 [15)   Perpetuities
                                                      Meaders. Robbins takes the position that in her
             Suspension of Absolute Power of
                                                      capacities she is the owner of an undivided one-eighth
        Alienation
                                                       *353 interest in and to described tracts and parcels of
        Restraints on alienation are contrary         land located in Jefferson County, Texas. At trial and
        to public policy and forbidden and            on appeal-as clearly set out in her brief-Robbins
        disallowed. Vernon's Ann.Texas Const.         relies upon a Deed from Ephriam Garonzik to James
        Art. 1, § 26.                                 Meaders ("the Garonzik deed") dated December 14,
                                                      1911.
        Cases that cite this headnote

                                                      Appellant contends that she is the owner of an
 (161   Mines and l\linerals                          undivided one-eighth interest in over forty tracts
            Actions                                   of land alleged to have been in the estate of
        lVIines and ·Minerals                         William McFaddin, deceased, but only four tracts were
              Rights and Liabilities as to Third      particularly described in the Garonzik deed. Appellant
        Persons                                       contends that certain other deeds and instruments exist
                                                      in her chain oftitle and that the remaining thirty-seven
        Affidavit of president of title company
                                                      tracts of land can obtain descriptions by numerous
        that land conveyed in 1911 deed was
                                                      references to the "land records of Jefferson County,
        located in city considerable distance from
        oil field, and that no oil or gas wells       Texas, and the estate of William McFaddin". 1 But the
        ever existed on the property supported        "bargained, sold and conveyed" clause ofthe Garonzik
        judgment in favor of oil company in           deed reads:
        action to recover unpaid royalties.

        Cases that cite this headnote                   [H]ave bargained, sold and conveyed, and by these
                                                        presents do grant, sell and convey unto the said
                                                        James Meaders, of the County of Dallas, State of
                                                        Texas, an undivided one-eighth interest in and to the
Attorneys and Law Firms                                 following described tracts and parcels of land, to-
                                                        wit:
*352 Joseph P. Conner, Brenham, Kyle Davis,
Chappell Hill, for appellant.                              Situated in the State of Texas, County of
                                                           Jefferson, and more fully described as hereinafter
                                                           set forth, the said property herein conveyed being



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Robbins v. HNG Oil Co., 878 S.W.2d 351 (1994)
12-g-~T&Gas~Rep.541

     four (4) tracts, the first of which said tracts is      approximately twenty years after its date. Without
     described as follows, to-wit:                           doubt, the Spindletop Oil Field had been in existence
                                                             and in production since the very early part of 1901.
  Then the deed describes only four tracts. The four         The Spindletop Oil Field was the field that brought the
  tracts were:                                               oil industry into its significant importance in January
                                                             of 1901 and it was extensively developed with prolific
     FIRST TRACT: "One labor, first class, Abstract
                                                             production before December of 1911.
     No. 166 ... (old Abstract No. 112)."

     SECOND TRACT: "One Hundred and Sixty                    The companies (hereinafter Defendants) filed
     (160) acres school lands ... known as Abstract No.      summary judgment motions. The defendants received
     181."                                                   a favorable grant of a summary judgment on several
                                                             grounds.
     THIRD TRACT: "Three Hundred and Twenty
     (320) acres (donation) ... (old abstract No. 119) ...    (1) Robbins presents four points of error. The first
     said abstract number being No. 182."                    point is:

     FOURTH TRACT: "Three Hundred and Twenty                              *354 The trial court erred in
     (320) acres ... Being Abstract No. l83 ... (old                     construing the Garonzik deed
     Abstract No. 120)."                                                 as conveying solely the four
                                                                         specifically described tracts
   The above are condensed forms or abbreviations of
                                                                         rather than an interest in all
   the full descriptions in the 1911 deed.
                                                                         properties inherited by the
In this litigation the appellant seeks an accounting for
                                                                         McFaddin heirs from William
unpaid royalties from the real property and mineral
                                                                         McFaddin as expressly stated in
interests in which appellant avers that she is entitled to
                                                                         the deed.
a one-eighth interest.
                                                             In this opinion we will endeavor to address appellant's
The appellees are HNG Oil Company, Elf                       four point of error in order.
Aquitaine, Inc., IMC Exploration Company, Pogo
Producing Company, and Westland Oil Development              Robbins does not contend that the 1911 deed was
Corporation. These companies were defendants below.          ambiguous, although she contends that the intention
                                                             of the 1911 deed should be construed to cover an
The deed from Garonzik to James Meaders bore                 additional thirty-seven tracts of land. In her written
the date of December 14, 1911. Interestingly, the            argument in her brief under Point One, Robbins does
Garonzik deed was filed for record March 21, 1931,           not aver any ambiguity in what property was conveyed
at 1:30 o'clock p.m.; this deed was recorded March           at each step in the Meaders chain of title. In the trial
26, 1931, in the office of the County Clerk of               court Robbins made no claim of ambiguity in the 1911
Jefferson County, Texas. The deed recites that the           deed.
described four tracts conveyed by the deed is all
of the property that J.H. McFaddin, R.D. McFaddin,           Jewell Robbins, individually and as attorney-in-fact,
and A.J. McFaddin inherited through their ancestor,          filed her response to the first motion for summary
Wm. McFaddin (spelled "McFadden" in the Garonzik             judgment of the defendants. The appellant's response
deed).                                                       to the summary judgment proceedings is lengthy. And
                                                             in the response the appellant refers in considerable
Nevertheless, appellant seeks to expand the deed so          detail to the Garonzik deed. In appellant's response,
that it is construed to include approximately thirty-        she makes no contention that the 1911 deed was
seven additional tracts of real property comprising the      ambiguous. Thus, the question of ambiguity was
Spindletop Oil Field in Jefferson County. Appellant's        not presented in the district court. Although a
claim in this litigation is based upon the Garonzik          second response to the defendants' second motion for
deed to James Meaders which deed was recorded                summary judgment was filed, the second response



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contained no contention that the 1911 Garonzik deed        later language used in the instrument of perpetual right
was ambiguous.                                             to use the water in: "being the same land conveyed
                                                           to us by Mary A. Manly, on Dec'r. 31st, 1919." In
In that posture, then, the construction of the deed        the water rights conveyance, one Bertha Craig and
became a question of law for the trial court. The          her husband S.A. Craig had joined and they had been
responses of appellant were not sworn to, nor did they     the owners of Subdivision four. The suit was by S.S.
have proper affidavits attached. Their office was that     Manly and Amos Manly, who were the grantees of
of a pleading. Generally, pleadings are not proof in       the perpetual water rights against Aaron Craig Coffee
summary judgment proceedings.                              and Kathryn Thigpen, who were owners by inheritance
                                                           from Mrs. Bertha Craig of Subdivision four.
 [2) Thus, the 1911 deed's language and wording
and its meaning becomes a question of law for the          The court held that where a recitation was made to
court. See Afyers v. Gu(l Coast ABnerals iifanagement      another deed or another record for the purpose of
Cmp., 361 S.\V.2d 193 (Tex.1962). If a written             showing from what source the real property had been
instrument is so worded that the same can be given a       derived and as a help in tracing the title, then such
certain and definite legal meaning or interpretation or    a reference or *355 referral will not and could not
construction by applying the relevant, pertinent rules     operate to enlarge the specific description given in
of construction, then the written instrument is not        the deed which contained the reference. This principle
ambiguous and parol evidence will not be received to       of law applies to the 1911 Garonzik deed because
create an ambiguity or to give the written instrument      there was in that deed an adequate and specific,
a different meaning from that which its own language       unambiguous description of the four tracts-hence, the      !
                                                                                                                     (
and wording imparts. See Universal C. I. T Credit          reference in the 1911 deed cannot be given the effect of
Cmp. v. Daniel, 150 Tex. 513,243 S.W.2d 154 (1951).        enlarging the specific descriptions to include different,
                                                           additional tracts of land. This reference only serves to
 [3] And this rule prevails even to the extent of          show the source from which the real property has been
prohibiting proof of circumstances surrounding the         derived.
transaction when the written instrument involved is
so worded that it is not fairly susceptible to more        It is noteworthy that the writ was refused outright in
than one legal meaning or construction. See Le-wis         Coffee v. Manly. In Cojfee, at the district court level
v. East Texas Finance Co.. 136 Tex. 149, 146               the plaintiffs demonstrated by extrinsic evidence that
S.W .2d 977 ( 1941 ). And importantly and paramountly,     Mary A. Manly had conveyed Subdivision four as well
no intention, however discovered, can contradict or        as Subdivisions five and six to the defendant grantors
destroy the legal effect of the wording and language       on the date in question, being "on Dec'r. 31st, 1919."
used. Reynolds v. iifcA1an Oil & Gas Co., 11 S.W.2d        And accordingly, the plaintiffs-grantees at trial were
778 (Tex. Comm'n App.1928, holding approved).              awarded water rights on Subdivision Four. On appeal,
See and compare Stahl Petroleum Co. v. Phillips            however, the court not only reversed the judgment
Petroleum Co., 550 S.W.2d 360 (Tex.Civ.App.-               but rendered the judgment for the defendants, holding
Amarillo 1977), affd, 569 S. W.2d 480 (Tex.l978). See      that the deed was unambiguous on its face and that
and compare Tower Contracting Company v. F7ores,           extrinsic evidence could not be admitted to contradict
157 Tex. 297,302 S.\V.2d 396 (1957).                       the deed or to create ambiguities. Parol testimony
                                                           is not admissible. Holding that it was simply not
In Coffee v. iHcm(v, 166 S.W.2d 377 {Tex.Civ.App.          permissible to give controlling effect to that which
-Eastland 1942, writ refd), the unanimous court in         creates an ambiguity and destroys the certainty which
an opinion by Justice Funderburk held that a grant         was expressed by other language is the holding in
unto certain grantees of a perpetual right to use the      Cartwright v. Trueblood 90 Tex. 535. 39 S.W. 930
water on Subdivisions five and six of Sections Nos.        (1897).
40 and 41 of the T. & P. Railroad Company lands in
Jones and Shackelford Counties, Texas, was a specific      We hold that the specific descriptions such as those
description and that specific description prevailed over   set out in the 1911 Garonzik deed of Abstracts 181,



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182, 183, and 166 definitely control over the reference       uncertainty in the description that does not appear on
to the source of the interest in the four tracts. We          the face of the deed but had its origin in extraneous
deem that the reasoning and rationale in the Cqflee           fact or an ambiguity, then the identity of the land
case is compellingly persuasive because Bertha Craig,         becomes a mixed question of law and fact which must
who was the owner of Subdivision four, and her                be determined by the jury. We reject this argument.
husband, joined in the conveyance of the perpetual            We conclude that the four tracts were not described
water rights. Nevertheless, the grantees only obtained        with uncertainty-nor was the 1911 deed ambiguous.
the water rights to Subdivision five and six. Bertha          The four tracts of land were identified, as *356 noted
Craig was clearly the owner of Subdivision four. Thus,        above, in the 1911 deed to Meaders; neither the four
the Garonzik 1911 deed could have conveyed only the           tracts nor the deed present a mixed question of fact
lands in Abstracts Nos. 166, 181, 182, and 183 and in         and law. Appellant's point of error number two insists
no other tract or abstract.                                   that the 1911 deed actually encompasses and conveys
                                                              interest in thirty-seven other tracts ofland described as
From the record before us and from the summary                McFaddin property.
judgment proofs as proffered by the defendants as well
as Robbins' responses to the motions for summary              The appellant under her point of error number
judgment, we determine that the Fifth Circuit in              two concedes that the appellees have submitted
the Jewell Robbins and Clark cases (as hereinafter            summary judgment evidence and proof by affidavits
discussed) considered, disposed of, and rejected all          demonstrating that no minerals have been produced
of the arguments and positions here advanced by               by any ofthe appellees from Abstracts 181, 182, 183,
Robbins. The Fifth Circuit especially rejected Robbins'       and 166. However, appellant takes the position that
arguments and contentions relevant to appellant's point       no evidence was introduced on nonownership and
of error number one. Thus, we are constrained to              nonproduction as to Pogo Producing Company. This
overrule appellant's point of error number one for            question will be discussed below. In point of error
the reason that the State trial court below properly          two appellant stresses: "[n]o evidence of any kind has
construed the Garonzik 1911 deed as conveying four,           been introduced, by affidavit or otherwise, on any of
and only four, specifically described tracts. There was       the other thirty seven tracts of the McFaddin property
no ambiguity in the deed, nor did Jewell Robbins in           about the production of minerals by these Appellees."
her various capacities present to the trial court the         But as noted above, we have construed the Garonzik
issue of ambiguity. See TEX.R.ClV.P. l66a(c). We              1911 deed as being strictly limited to Abstracts 181,
have overruled appellant's point of error number one          182, 183, and 166. Thus, whether production of
pursuant to Texas precedents. Nevertheless, at least          minerals by these appellees from any of the other
two ofthe Fifth Circuit decisions are also of controlling     thirty-seven tracts is a non-issue. Appellants have
effect. See Robbins v. Amoco Production Co., 952 F .2d        not controverted the evidence and affidavits of the
901 (5th Cir.l992); Clark v. Amoco Production Co.,            appellees (showing nonownership and nonproduction)
908 F.2d 29 (5th Cir.l990). Robbins had also litigated        being: HNG Oil Company, Elf Aquitaine, Inc., IMC
previously in Robbins v. Chevron U.S.A., Inc., 940            Exploration Company, Westland Oil Development
F.2d 1529 (1991).                                             Corporation. Pogo Producing Company is excepted.
                                                              Our decision on appellant's point of error one definitely
 [4] Appellant's point of error number two argues that        governs appellant's point of error two which is hereby
the evidence introduced by appellees in support of            overruled.
their summary judgment was insufficient as a matter
of law to support the summary judgment granted by             Appellant's point of error number three argues this:
the trial court. As briefed by the appellant, this point of
error two deals only with the issue of which properties                    The trial court erred in relying
were conveyed. First, the appellant concedes that the                      upon cases with different
interpretation of real property descriptions is normally                   parties in federal court as
a matter exclusively for the court; nevertheless,                          preventing full decision on the
the appellant further argues that when there is an



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             merits of appellant's cause of                   Sam 0. Smith was personally familiar with the
             action.                                          William McFaddin Labor Abstract No. 166, said Labor
                                                              containing 177 acres and was patented by the Republic
We disagree. And equally important is that part               of Texas to William McFaddin on July 24, 1845. Sam
of the record before us establishing the defendants'          Smith searched for any deed, lease, or other type of
nonproduction in the four abstracts described in              instrument conveying any interest in No. 166 to the
the 1911 deed. This summary judgment proof and                defendants. Smith could not locate any instrument of
evidence was proper and supported the summary                 record in Jefferson County naming any of the entities
judgment granted by the trial court. Robbins did              as grantees and indexed to any of the above described
not controvert the nonproduction of these four oil            lands. Furthermore, he did not know of any oil and
companies.                                                     *357 gas wells located in the William McFaddin
                                                              Labor Abstract No. 166.


       Some Background Factors Relevant to                    In like manner, Smith could not locate any evidence of
      Appellant's Point of Error Number Three                 any recorded instruments which may have conveyed
                                                              any interests by deed, lease, or otherwise to Abstracts
Jewell Robbins, individually and as the legal                 181, 182, and 183 to any of the above named
representative and attorney-in-fact for the heirs of          entities which might affect the lands lying in any
James Meaders, has also claimed that the defendants           of the Abstracts Nos. 181, 182, and 183. In view
had unlawfully produced oil, gas, and minerals from           of our opinion concerning the 1911 deed, these
under the four tracts specifically described for which        oil company defendants needed no evidence to
the plaintiff in her various capacities sought an             support their motions for summary judgment other
accounting and damages.                                       than the uncontested affidavits of nonownership and
                                                              nonproduction from Abstracts Nos. 181, 182, 183, and
The defendants had joined issue herein by answering           166. See Robbins
                                                                       .        v .Amoco Production Co.. 952 F.2d
with the following pleas of general denial, pleas of not      901 (5th Cir.l992); Clark v. Amoco Production Co.,
guilty, pleas of the statutes of limitations, res judicata,   908 F.2d 29 (5th Cir.l990).
collateral estoppel, and stare decisis. Significantly,
the defendants by appropriate and proper summary              By means of amended answers, each one of the
judgment proof and evidence advance the defense               defendants pleaded that the final judgments entered
that the plaintiffs claim against the defendants for          in the Federal court litigation in Robbins v. .Amoco
damages fails because the defendants have not owned           Production Co., supra, and Clark v. Amoco Production
or produced any oil and gas or other minerals from            Co., supra, had binding effect and fmal effect under
Abstracts 181, 182, 183, or 166.                              several doctrines. In this case, the defensive pleaded
                                                              doctrines were, inter alia, res judicata, collateral
There exists an extensive, in depth and detailed              estoppel, and stare decisis. Each of these doctrines
affidavit of one Sam 0. Smith dated April 9, 1992.            were asserted in defense of this suit at the trial
In brief summary, Sam Smith had been continuously             level and, in the defendants' motions for summary
engaged in the land title and abstract business in            judgment, the defendants pleaded and reasserted that
Jefferson County Texas, for twenty-two years as               the defendants were entitled to summary judgment
president ofthe Jefferson County Title Company, Inc.,         based on these same, well-established doctrines.
and as president of the Jefferson County Abstract             Interestingly and importantly, the trial brief of the
Company, Inc., from 1975 through April 1990. The              defendants urged these doctrines and supported and
abstract plant involved utilized and contained a              argued the same with applicable authorities for such
geographical indexing of all real estate instruments          defenses.
recorded in Jefferson County from the sovereignty of
the soil to the date of the affidavit.                        Indeed, the trial court's order granting the motion for
                                                              summary judgment cited and referred to the federal
                                                              cases as binding and possessing finality as against



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the plaintiff in her several capacities by establishing          full and fair opportunity to litigate the issue in the
that as a matter of law the Garonzik 1911 deed                   prior suit" (emphasis added). [emphasis theirs]
only conveyed interest in the four tracts that were
specifically described as Abstracts Nos. 181, 182, 183,     Jewell Robbins is the self-same Jewell Robbins in the
and 166-and nothing more. We have affirmed the              same capacities as plaintiff in the prior litigation. In her
action of the trial court in that regard. Further, the trialindividual capacity she was the same actual party in the
court determined that the defendants were entitled to       prior litigation. Jewell Robbins in her representative
summary judgment because of lack of ownership by             *358 capacity or in her attorney-in-fact capacity was
the plaintiff in the other thirty-seven tracts.             certainly in privity in the prior litigation. In the prior
                                                            Federal litigation she sued for two hundred heirs of
                                                            James Meaders. In this State litigation she is suing as
                                                            the attorney-in-fact for Abigail Meaders, as the heir of
            The Collateral Estoppel Defense
                                                            James Meaders. Therefore, we conclude that Abigail
 [5]    [6] We determine that the doctrine of collateral is in privity with the two hundred heirs of the same
estoppel properly applies and is a correct basis for one    James Meaders inasmuch as she claims directly under
of the separate, independent grounds for the granting       James  Meaders; thus, she claims she is an heir of James
of the motion for summary judgment. We think that           Meaders.   We conclude the trial court was correct in
the well-established rules of collateral estoppel as        granting  the motion on the separate basis of collateral
applied by the Supreme Court of Texas no longer make        estoppel.
mutuality a requirement. Appellant has contended that
a lack of mutuality defeats summary judgment. We            We perceive that there was also an identity of lawyers
disagree. In Eagle Properties, Ltd v. Scharbauer. 807       at crucial times. It is significant and important that
S.W.2d 714 (Tex.1990), the Supreme Court of Texas           in  the Federal court suit that Robbins as plaintiff
in a unanimous opinion written by Justice Cook held:        both  in the trial court and as appellant in the appeal
                                                            was represented by the legal professional who has
                                                            represented Robbins in the case at bar at the time the
A. No Requirement of Mutuality                              summary judgment for the defendants was granted.
In Benson v. H7anda Petroleum Co., 468 S.W.2d 361           Later this counsel withdrew. It is evident that the
(Tex.l971 ), this Court stated,                             same arguments and contentions were made in the
                                                            Federal court Robbins case as were made below in this
      The rule [of collateral estoppel] is generally stated State court litigation and those same arguments and
      as binding a party and those in privity with him .... contentions were overruled in both courts.
      Due process requires that the rule of collateral
      estoppel operate only against persons who have        Hence, it is accurate to state that the parties here and
      had their day in court either as a party to the prior in the prior Federal case were in privity in that Abigail
      suit or as a privy, ....                              Meaders is an heir of James Meaders. Also, the identity
                                                               of the attorneys and the identity of the issues that were
  This definition does not require mutuality for the
                                                               presented and determined in the prior Federal court
  invocation of collateral estoppel; rather, it is only
                                                               proceeding and in the State trial court were shown as
  necessary that the party against whom the plea
                                                               being the same. In the Federal court cases at the Circuit
  of collateral estoppel is being asserted be a party
                                                               level each involved the issue ofthe legal interpretation
  or in privity with a party in the prior litigation.
                                                               of the 1911 deed, holding that the construction of said
  A~vrick v. Moody Nat'/ Bank, 590 S.W.2d 766,
                                                               deed was a question of law for the court.
  769 (Tex.Civ.App.-Houston [14th Dist.] 1979,
  writ refd n.r.e.); Hardy v. 1~1eming, 553 S.W.2d
                                                               Again, in Eagle Properties, Ltd v. Scharbauer, supra,
  790, 793-·-93 (Tex.Civ.App.·-···-·El Paso 1977, writ
                                                               the Texas Supreme Court resolved the question of
  refd n.r.e.). As this Court stated in Tarter v.
                                                               the application of the doctrine of collateral estoppel
  Aff.~tropolitan Sav. & Loan Ass'n [744 S.\V.2d 926
                                                               in a state court suit, we perceive, based upon a prior
  ( 1988) ], "The doctrine applies when the party
                                                               federal court suit and judgment. Our Supreme Court
  against whom collateral estoppel is asserted had a




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held that collateral estoppel precludes the relitigation     In Clark 11; the Circuit Court passed upon and
of identical issues of fact and precludes the relitigation   specifically and definitively construed the *359 1911
of identical issues of law. Our Texas Supreme Court          Garonzik deed to James Meaders. There, Clark and
held this:                                                   Profitt, as administrators ofJames R. Meadors' estate,
                                                             instituted litigation in the Federal District Court of the
             Under state law, collateral                     Eastern District of Texas against four oil companies,
             estoppel only precludes the                     alleging that the oil companies had extracted without
             relitigation of identical issues                payment or permission literally billions of dollars
             of fact or law which were                       worth of oil and gas from the lands in which James
             actually litigated and essential                Meadors claimed a one-eighth interest. These lands
             to the prior judgment. Tarter,                  were perceived to include and encompass the famed
             744 S.\V.2d at 927; Van Dyke
                                                             Spindletop Oil Field 3 . Judge Joe J. Fisher of the
             v. Boswell, O'Toole, Davis &
                                                             District Court granted a summary judgment in favor of
             Pickering. 697 S. W.2d 381, 384
                                                             the defendant oil companies, concluding that the deed
             (Tex.l985).
                                                             (being the 1911 deed upon which the administrators
ld.. 807 S.W.2d at 721-···-22. Under this record, we         based their claim) conveyed rights only to four specific
conclude that identical issues of law were actually          tracts of land in which the companies had never held
litigated and were essential to prior decisions and          any interest. The suit in the Federal District Court
judgments. We hold that the defendants have met              was to establish the Meadors' interest in Jefferson
                                                             County lands in general and to obtain an accounting of
and satisfied the elements of collateral estoppel. 2 See
                                                             all minerals produced therefrom. Such an accounting,
and compare Peregoy v. Amoco Production Co., 742
                                                             the Meadors heirs and their representatives asserted,
F.Supp. 372 (E.D.Tex.l990), affd, 929 F.2d 196 (5th
                                                             would reveal that Meadors' estate was entitled to
Cir.), cert. denied, 502 U.S. 864, 112 S.Ct. 188, 116
                                                             at least twenty billion dollars in royalties from the
L.Ed.2d 149 (1991).
                                                             oil companies' unauthorized use and production from
                                                             the various properties for a period exceeding seventy
Thus, we conclude and hold that the question of law
                                                             years.
that was decided in the Robbins Federal court case as
well as the Clark Federal case (which was brought by
                                                             It is clear from the opinion that the basis of the
and on behalf of Meaders' heirs)-which question of
                                                             Meadors' estate claim is the 1911 deed from Ephriam
law resulted in fmal judgments in the United States
                                                             Garonzik to Meaders that purported to convey four
Courts determine that, as a matter of law, the 1911
                                                             specifically described tracts of land in Jefferson
deed only purported to convey interest in the four
                                                             County, being the same identical deed upon which
specifically described abstracts as numbered above
                                                             Jewell Robbins bases her claims. However, in addition,
and importantly, that the 1911 deed could not be
                                                             the Garonzik 1911 deed to Meaders stated that those
enlarged so as to include any additional tracts. By like
                                                             four parcels were all the lands in Jefferson County
reasoning and rationale, as noted later, we hold that the
                                                             that the same grantors of the McFaddin family had
doctrine of stare decisis applies and is binding upon
                                                             inherited from their ancestor, William McFaddin, and
Jewell Robbins, individually and as attorney-in-fact
                                                             further, that the intention ofthe grantors was to convey
for Abigail. Jewell Robbins, in her several capacities,
                                                             all of the properties in the thus-defined McFaddin
had a full and fair opportunity to present and litigate
                                                             inheritance. In Clark II, 908 F .2d at 31, the Fifth
her issues in a prior suit. Indeed, she did so. We
                                                             Circuit set out in a footnote the exact language,
overrule appellant's point of error number three.
                                                             wording and clauses in the 1911 deed and judicially
                                                             determined that deed's meaning and legal import. We
                                                             set out in our footnote number three the pertinent
      Fifth Circuit Court of Appeals' Opinion                portions of the 1911 deed specifically adjudicated and
         in Clark v. Amoco Production Co.,                   definitely determined by the Fifth Circuit 4 . The Fifth
        908 f:2d 29 (5th Cir.J990)-Clark II                  Circuit squarely passed on the clause in the deed that
                                                             reads: "and this deed is intended to convey to the



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Robbins v. HNG Oil Co., 878 S.W.2d 351 (1994)



said James Meaders [sic] one-eights [sic] interest in       contract or a deed a meaning different from that which
and to all properties ... that the said ... [McFaddens]     its language imparts.
are entitled to by inheritance ... of every description
whatsoever" is to be construed-according to the
plaintiffs (in Clark II) that the 1911 deed was intended
                                                                 The Opinion in {.!ewell} Robbins v. Amoco
to convey a one-eighth interest not only in the four
                                                                Production Co., 952 F.2d 9(Jl (5tll Cir.1992)
described tracts but also in all ofthe Jefferson County
land inherited through their ancestor Wm. McFaddin          But Jewell Robbins has litigated before. The previous
by J.H., A.J., and R.D. McFaddin. But the Fifth             litigation was based directly and squarely on the
Circuit disagreed. These other, additional lands were       deed dated December 14, 1911, being the deed from
determined to have included parts of the Spindletop         Ephriam Garonzik to James Meaders. Jewell Robbins
field. From the Spindletop fields the oil companies had     had alleged that she individually and as attorney-in-
produced billions of dollars worth of oil and gas.          fact for some two hundred heirs of James Meaders
                                                            owned and owns an undivided one-eighth interest in
  *360 In Clark 11, the Fifth Circuit specifically          certain lands located in Jefferson County, Texas. The
wrote that the trial court correctly held that the 1911     prior Jewell Robbins litigation involved the very same
deed unambiguously conveyed an interest only in             deed determinative of this appeal.
four parcels of land. The circuit court then held
that the 1911 deed unambiguously evidenced an               The 1911 deed conveyed an undivided interest in four
 intent to convey only the four specifically described      specifically described tracts of land. These four tracts
tracts. The deed was construed as clearly stating that      of land were said to be situated at some distance
"the said property herein conveyed being four (4)           between three to sixteen miles from the Spindletop
tracts". Then the deed provides a legal description of      dome. In the prior litigation involving the same 1911
these four properties and the deed explains that "the       deed, Robbins relied upon certain language, claiming
above described property herein conveyed is all the         that the deed included also thirty-seven additional
property that the" McFaddins inherited from William         tracts which did include the land upon which the
McFaddin.                                                   Spindletop dome is situated. Robbins in the prior suit
                                                            contended that various oil companies had extracted oil
 [7] It was recognized that the deed redundantly stated     and gas and other minerals from the land described in
that it is intended to convey one-eighth interest in all    the 1911 deed without compensating Meaders or his
the lands inherited by the McFaddins from William           heirs.
McFaddin, being a phrase already defined within the
instrument as equal to the four described tracts. The       The United States District Court for the Eastern
issue was then clearly decided that there was no            District of Texas, Judge Joe J. Fisher, held that the
merit to the Clark 1l plaintiffs' contention that the       crucial 1911 Garonzik deed conveyed only the four
deed is ambiguous on its face and that therefore,           specifically referenced and described tracts. The prior
extrinsic evidence, that is the inventory of the William    Jewell Robbins litigation specifically dealt with the
McFaddin estate must be admitted in order to remove         interpretation of the Garonzik deed of 1911 which
and resolve the ambiguity. We agree that the 1911           set forth specific descriptions of four tracts of land
deed is unambiguous and that the deed is forced             designated as Abstracts 166, 181, 182, and 183. The
into a false ambiguity only when extrinsic evidence         relevant, governing, operative language of the deed is
is introduced to attempt to show something contrary
                                                            set out verbatim in Robbins v. Amoco, supra, at 903 5 .
to the express terms of the deed in that the Wm.
                                                            Again, the Fifth Circuit dealt with and construed the
McFaddin estate contained more than four parcels of
                                                            exact same clauses in the 1911 deed upon which the
land. We determine that such extrinsic evidence is
                                                            same Jewell Robbins now relies upon to expand the
impermissible under the Texas law which has been
                                                            said deed to include thirty-seven additional (or more)
established to the effect that parol evidence will not be
                                                            tracts of land.
received or admitted to create an ambiguity or to give a




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Robbins v. HNG Oil Co., 878 S.W.2d 351 (1994)
129~c>Tr~r<3as "Ff9p':s4r

Robbins has previously specifically argued and               unambiguous on a number of occasions, one of which
maintained that the McFaddins had *361 owned more            involved Jewell Robbins. Robbins in State court has
than forty different parcels of real property in Jefferson   certainly not demonstrated why Robbins v. Amoco,
County at the time of the 1911 conveyance. And               supra, in Federal Fifth Circuit Court should not
Robbins has previously specifically asserted that the        govern this appeal. Thus, we necessarily hold that the
language must be construed to convey not just the four       1911 deed conveyed, at the very most, an interest
specifically described parcels or tracts, but all of the     in the four parcels of land (if it did so convey)
tracts owned by the McFaddins in Jefferson County.           specifically described in the 1911 deed and nothing
The circuit court overruled Robbins' construction of         more. The doctrine of stare decisis gives force of
the 1911 deed specifically; as we do now. Put in             law to precedents and is broader in its scope than the
simplest terms, Jewell Robbins' attempt to expand the        doctrine of collateral estoppel. Commonality or privity
deed beyond the four referenced tracts has failed in the     among the parties to the present or prior litigation is
past in at least two squarely decided, "White Horse"         not required by stare decisis. In suits involving claims
cases and must fail now. The Fifth Circuit has, at           to title to land, stare decisis is particularly applicable.
least on two prior occasions in two published opinions,      This is true because of the importance of establishing
squarely made the holding-an actual holding-                 stability of land titles, sales, and transactions. When
that the 1911 deed was not ambiguous and thus,               a reviewing court with jurisdiction sets forth a fmal
extrinsic evidence had to be refused. That court             ruling on a matter of law before that appellate court,
necessarily based its interpretation and construction of     then such ruling and determination is binding and
the deed upon the contractual language. The Federal          conclusive in all subsequent suits involving the same
appeals court specifically held that inasmuch as the         subject matter, whether the parties and the property
interpretation of the unambiguous terms of a contract        are the same or not. Sturgeon v. Strachan Shipping
is purely a question of law, the interpretation is one for   Co., 698 F.2d 798 (5th Cir.l983); C'ase-Pmneroy Oil
the court. See Bro14'1ling v. Navarro, 743 F.2d 1069,        Corporatiou v. Pure Oil Company, supra.
 1080 (5th Cir.l984).


                                                                       The Doctrine of Issue Preclusion;
              The Stare Decisis Defense                                 alkla Preclusion by Judgment

 [8] We decide that once a defmitive construction has     [12]     [13]    Additionally and as an independent
been given to a specific writing or a particular specified
                                                         ground of defense, we hold that the district court
fact situation such as the determination of the true     ruling below was correct based on the doctrine of issue
construction of a will or the validity of a deed, such   preclusion. We hold that the questions below and the
a definite determination is binding and conclusive in    questions before us on appeal definitely involve the
subsequent suits involving the same subject matter and   doctrine of issue preclusion, also known as preclusion
the self-same deed whether the parties and the property  by judgment. This doctrine is clearly implicated by
are the same or not. The doctrine of stare decisis       reason of the prior federal judgments construing and
controls the result. And Robbins loses. See Case-        determining the exact effect of the Garonzik 1911
Pomeroy Oil Corporation v. Pure Oil Company, 279         deed. Issue preclusion, or preclusion by judgment,
S.W.2d 886 (Tex.Civ.App.-\Vaco 1955. writ refd).         bars the relitigation of identical questions of fact or
                                                         law that were actually litigated and which questions
 [9] [10] [11] Furthermore, lacking any subsequent of fact or of law were essential to the judgment
disapproval by the proper state court, the Federal       in the prior suits. Van Dyke v. Boswell, O'Toole,
interpretation and construction still applies with equal Davis & Pickering, 697 S.\V.2d 381 (Tex.l985);
force to cases such as the one before us. Jewell Robbins RESTATEMENT (SECOND) OF JUDGMENTS § 27
is not in a position to demonstrate or maintain how      (1980).
the quantity or quality of extraneous evidence would
explode the prohibition against considering such          *362 Indeed, our Texas Supreme Court has cited
evidence when the 1911 deed has been pronounced          section 87 of the RESTATEMENT (SECOND) OF



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Robbins v. HNG Oil Co., 878 S.W.2d 351 (1994)
                                                                           .
·129-olr&-<3as~.Ra·IJ~·s4·r~-----~-w··---·-··~--·--·-~·--~-----__.- ~.-----·-···----··---------··-·-····---·--




JUDGMENTS, and our highest civil court has                     See and compare Gillum v. Temple, 546 S.W .2d 361,
determined where the earlier judgment was rendered             363 (Tex.Civ.App.-Corpus Christi 1946, writ refd
in a federal court, that intermediate State appellate          n.r.e.). The correct concept of the term "chain of
courts are to follow the federal decisions based on            title" under Texas law has been defmed as "[t]he
issue preclusion. See Jeanes v. Henderson, 688 S.W .2d         successive conveyances, commencing with the patent
100, 103 (1985). See Acker v. City ofHuntsville, 787           from the government, each being a perfect conveyance
S.W.2d 79 (Tex.App.-Houston [14th Dist.] 1990, no              of the title down to and including the conveyance
writ). Therefore, under the doctrine of issue preclusion       to the present holder." See Reserve Petroleum Co.
in view of the identity of the party-plaintiff, being          v. Hutcheson. 254 S.W.2d 802, 806 (Tex.Civ.App.-
Jewell Robbins in her various capacities, with the             Amarillo 1952, writ refd n.r.e.).
identity of the attorneys and the identity of the
questions of law presented, we hold that the federal           Under this record we hold that the 1898 agreement to
decisions and determinations in Robbins and Clark,             Lucas which failed to mention or describe any specific
supra, are definitely binding upon the plaintiff here          property, but only referred to the William McFaddin
and upon the State courts under the doctrine of issue          estate was insufficient and inadequate to establish a
preclusion. We hold in this case that it is correct to give    complete chain of title as to the three abstracts, 181,
effect to the holdings, judgments, and opinions of the         182, and 183. Pursuant to this holding, the trial court's
Fifth Circuit Court.                                           summary judgment denying the plaintiffs claim was
                                                               properly granted on this additional basis-that basis
 [14] Although it may be redundant and somewhat                being the plaintiffs failure to establish a complete and
overlapping, we hold that the trial court correctly ruled      proper chain of title to the three abstracts 181, 182, and
that the plaintiffs chain of title as to Abstracts 181,        183.
182, and 183 failed because the inventory of William
McFaddin's estate did not list such Abstracts as being
assets of the said estate. We conclude that the plaintiff
                                                                     Appellant's Point of Error Number Four
has failed to establish a complete, correct chain of
title to any of the four tracts conveyed in the 1911           But, the appellant contends that under her point of error
deed with the exception of Abstract 166. Abstract 166          number four that Wm. McFaddin in certain instances
was listed in the proper inventory. Robbins is in a            was prohibited from alienating any property during his
position of being obliged to rely upon a certain March         lifetime because of the prohibition against alienation
9, 1898, agreement. This 1898 agreement is in essence          in the Donation Patent. This contention was not raised
a lease which contains what might be described as              or presented to the trial court at the proper time when
a five-year primary term. The agreement is between             the motion for summary judgment was presented,
certain McFaddins and one Anthony Lucas. The 1898              considered, and granted. Therefore, it is clearly not
agreement is limited to a one-fourth undivided interest        before this Court of Appeals for consideration. In order
in the tracts or parcels of land that are referenced in        for an appellant to preserve a complaint for appellate
the William McFaddin estate. It is undisputed that the         review, that appellant must have presented to the trial
inventory of the William McFaddin estate simply fails          court a timely request, objection, or motion stating the
to list Abstracts Nos. 181, 182, and 183. Thus, the            specific grounds for the ruling he desired the court
plaintiffs chain oftitles as to these three abstracts fails.   to make and it is also necessary for the appellant to
                                                               have obtained a ruling from *363 the trial court upon
The defendants, however, never owned any interest or           his contention or his issue. TEX.R.APP.P. 52( a). Rule
produced any minerals from the Abstract No. 166. The           52( a) is harmonious and consistent with Rule 166a(c)
plaintiff, of course, must establish her own title and the     of the Texas Rules of Civil Procedure, especially
plaintiff can prevail only on the strength of her own          pertaining to summary judgment proceedings. Rule
title. Hunt v. Heaton, 643 S.\V.2d677, 679 (Tex.1982);         166a(c) states:
Landv. Turner, 377 S.\V.2d 181, 183 (Tex.1964). In
order to succeed, a plaintiff must establish a superior                        Issues not expressly presented
title in himself or herself by an affirmative showing.                         to    the trial    court    by



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                                                                                                                                R398
Robbins v. HNG Oil Co., 878 S.W.2d 351 (1994)
:f29olT& Gas Rep. 541·

             written motion, answer or
                                                                [16] The affidavit of Sam 0. Smith has been reviewed
                                                               and analyzed a second time. We determine that
             other response shall not be
                                                               Abstract No. 166 principally exists in the northern and
             considered on appeal as
                                                               western parts of the City ofBeaumont and is therefore
             grounds for reversal.
                                                               removed a considerable distance from the Spindletop
                                                               Oil Field. The summary judgment proof plainly shows
 [15] But it is Hornbook law and an axiomatic rule that
                                                               that the Averill Addition, the First McFaddin Addition,
restraints on alienation are squarely contrary to public
                                                               and the Second McFaddin Addition (when dedicated)
policy and are forbidden and disallowed. See Article
                                                               were parts ofBeaumont as the City then existed. These
I, § 26 of the 1876 Constitution, as amended. In 34
                                                               additions are located in Abstract No. 166. Furthermore,
TEX.JUR.3d Estates§ 61 (1984) it is written:
                                                               the proof establishes that no oil or gas wells, according
             Alienability is a legal incident                  to the affiant, have existed or did exist in Abstract
             of property and restraints                        No. 166. This affidavit is similar to the evidence of
             against it are contrary to public                 nonproduction passed on and approved of in Clark
             policy unless imposed under                       fl. Appellant does not controvert these matters. In
             an active trust. Accordingly,                     AfcConnell v. Southside School Dist., 858 S.W.2d 337
             a provision that annexes to                       (Tex.l993 ), our Supreme Court wrote:
             a grant or devise a general
                                                                  Likewise, issues a non-movant contends avoid the
             restraint on the grantee's or
                                                                  movant's entitlement to summary judgment must
             devisee's power to convey or
                                                                  be expressly presented by written answer to the
             transfer the property is invalid.
                                                                  motion or by other written response to the motion
             Thus, a condition against
                                                                  and are not expressly presented by mere reference to
             alienation during the lifetime
                                                                  summary judgment evidence. See City of Houston
             of the grantee, contained in
                                                                  v. C'lear Creek Basin Authority. 589 S.W.2d 671.
             a deed purporting to convey
                                                                  678 (Tex.1979) ("the non-movant must expressly
             an absolute fee simple estate,
                                                                  present to the trial court any reasons seeking to avoid
             has been held to be void on
                                                                  movant's entitlement ...").
             the ground either that it is
             repugnant to the estate granted,
                                                               Thus, Pogo as well as the other four defendants were
             or, admitting that such a
                                                               entitled to a summary judgment. No damages were
             restriction may be imposed for a
                                                               shown by plaintiff; no grounds for an accounting were
             reasonable time, that it restricts
                                                               shown by plaintiff; no extraction of oil, gas, or other
             alienation for an unreasonable
                                                               minerals by these defendants were shown by plaintiff.
             time. (emphasis added)
                                                               The trial court's judgment is affirmed.
See O'Connor v. Thetford, 174 S.W.                    680
(Tex.Civ.App.-San Antonio, 1915, writ ret1 d).                 AFFIRMED.


                                                               All Citations
    Pogo Producing Company and Abstract No. 166
                                                               878 S.W.2d 351, 129 Oil & Gas Rep. 541


Footnotes
1      For edification, "McFaddin" will be spelled throughout this opinion with an "i", however, some re~erences
       quoted spell the name with an "e". "Meaders" in this cause of action is spelled with an "ers"; agam, some
       actions quoted spell the name "ors".
2      The elements of collateral estoppel are:
            (1) the issue at stake being identical to the one involve~ in th.~ pr~vious litigation;
            (2) the said issue has been actually litigated in the prev1ous ht1gat1on; and



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Robbins v. HNG Oil Co., 878 S.W.2d 351 (1994)



            (3) the determination of that issue in the previous litigation had been a critical and necessary part of
            the judgment in that previous litigation.
3     The Fifth Circuit in a footnote noted that "[t]he Spindletop Oil Field has been a leading source of oil production
      since 1901. The discovery of the 'Lucas Gusher' at Spindletop began the East Texas oil boom. Uncounted
      billions of dollars worth of oil have since been produced in the Spindletop field ... Clark v. Amoco Production
      Co., [hereinafter referred to as Clark I] 794 F.2d 967, 969 n. 2 (5th Cir.1986)."
4     The pertinent portions of the deed are quoted below:
            I, Ephriam Garonzik, of the County of Dallas, State of Texas, for and in consideration of the sum ofTen
            ( 10) Dollars and other considerations, the receipt of which is hereby acknowledged, have bargained,
            sold and conveyed, and by these presents do grant, sell and convey unto the said James Meaders
            [sic] of the County of Dallas, State of Texas, an undivided one-eighth interest in and to the following
            described tracts and parcels of land, to-wit: Situated in the State of Texas, County of Jefferson, and
            more fully described as hereinafter set forth, the said property herein conveyed being four (4) tracts ....
         [A specific description of the four tracts-Abstracts 166, 181, 182, and 183-follows.]
            ... [T]he above described property herein conveyed is all the property that the that [sic] J.H. McFadden,
            R.D. McFadden, and A.J. McFadden inherited through their ancester [sic], Wm. McFadden, and this
            deed is intended to convey to the said James Meaders [sic] one-eights [sic] interest in and to all
            properties properties [sic] that the said J.H. McFadden, A.J. McFadden, and R.D. McFadden are entitled
            to by inheritance through their ancestor, the said Wm. McFadden, of every description whatsoever,
            situated in the said County of Jefferson.
5     Quoting from Robbins:
            [T]he above described property herein conveyed is all the property that ... J.H. McFadden, R.D.
            McFadden, and A.J. McFadden inherited through their ancester [sic], Wm. McFadden, and this deed is
            intended to convey to the said James Meaders one-eights [sic] interest in and to all properties ... that
            the said J.H. McFadden, A.J. McFadden, and R.D. McFadden are entitled to by inheritance through
            their ancestor, the said Wm. McFadden, of every description whatsoever, situated in the said County
            of Jefferson.


End of Document                                                 © 2015 Thomson Reuters. No claim to original U.S. Government Works.




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Omron Healthcare, Inc. v. Maclaren Exports ltd., 28 F.3d 600 (1994)


                                                                conferring exclusive jurisdiction on high
                                                                court of justice in England, where
       Original Image of28 F.3d 600 (PDF)                       manufacturer contended that its conduct
                     28F.3d6oo                                  in selling strollers bearing former
            United States Court of Appeals,                     distributor's marks was justified by
                   Seventh Circuit.                             pretermination orders distributor placed
                                                                under agreement, coupled with its refusal
                OMRON HEALTHCARE,
                                                                to accept delivery.
                INC., Plaintiff-Appellant,
                              v.                                12 Cases that cite this headnote
               MACLAREN EXPORTS
            LIMITED, Defendant-Appellee.                  [2]   Contracts
                                                                      Legal Remedies and Proceedings
            No. 93-2965.  Argued March
                                                                But-for causation is unsatisfactory
        31, 1994. I Decided June 27, 1994.
                                                                understanding of language in forum
Former exclusive distributor brought action against             selection clause referring to "disputes
baby stroller manufacturer for trademark infringement,          arising out of' agreement.
based upon posttermination distribution of strollers
                                                                37 Cases that cite this headnote
with former distributor's marks. Manufacturer filed
motion to dismiss based upon forum selection
clause in distributorship agreement, which conferred      [3)   Contracts
exclusive jurisdiction on the high court of justice              ~    Legal Remedies and Proceedings
in England. The United States District Court for                That foreign court designated in forum
the Northern District of Illinois, Brian Bamett                 selection clause would have to interpret
Dun:    J., enforced forum selection clause and                 federal law was no obstacle to reference.
dismissed case, and former distributor appealed.
The Court of Appeals, Easterbrook, Circuit Judge,               11 Cases that cite this headnote
held that trademark infringement suit arose out of
distributorship agreement, within meaning of forum
                                                          [4]   Contracts
selection clause, in light of manufacturer's contention
                                                                 ~    Legal Remedies and Proceedings
that its conduct in selling strollers bearing former
distributor's marks was justified by pretermination             All disputes resolution of which arguably
orders distributor placed under agreement, coupled              depend on construction of agreement,
with its refusal to accept delivery.                            "arise out of' that agreement for purposes
                                                                of forum selection clause.
Affirmed.
                                                                42 Cases that cite this headnote


                                                          [5J   Contracts
 West Headnotes (6)                                              ~ Agreement as to Place of Bringing
                                                                Suit; Forum Selection Clauses
 [l]       Contracts                                            Sending trademark infringement dispute
                 Legal Remedies and Proceedings                 to England pursuant to forum selection
           Former exclusive distributor's trademark             clause in distributorship agreement would
           infringement suit against baby stroller              not offend public policy of the United
           manufacturer arose out of distribution               States; litigating in England would be
           agreement, and thus was subject to                   neither immoral nor illegal, and no law or
           forum selection clause in agreement                  policy ofthe United States demanded that




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Omron Healthcare, Inc. v. Maclaren Exports Ltd., 28 F.3d 600 (1994)


        every dispute be litigated in tribunal with       with trademarks identifying Omron as the seller.
        most experience.                                  (Each stroller also, and more prominently, identified
                                                          Maclaren as the manufacturer.) Maclaren blames
          11 Cases that cite this headnote                Omron for this situation, contending that after
                                                          receiving notice of termination Omron placed firm
 (61     Contracts                                        orders for the strollers, demanded that Maclaren build
                Agreement as to Place of Bringing         them, and then refused to accept delivery; Omron
          Suit; Forum Selection Clauses                   denies that it is responsible for the excess inventory.
                                                          Maclaren and its new distributor pasted labels over
        Third-party interests in trademark laws
                                                          the Omron marks and included literature identifying
        are not so dominant that they must
                                                          Kid Co as the reseller but did not succeed in obliterating
        be protected from parties' voluntary
                                                          all traces of Omron's trademarks. Omron demands a
        bargains, by refusing to enforce forum
                                                          remedy. Maclaren moved to dismiss, relying on this
        selection clause conferring exclusive
                                                          portion of its contract with Omron:
        jurisdiction on foreign court.
                                                                       The parties hereto agree that
          11 Cases that cite this headnote
                                                                       all disputes arising out of
                                                                       this Agreement which cannot
                                                                        *602 be resolved amicably
                                                                       between the parties shall be
Attorneys and Law Firms
                                                                       referred to the High Court of
 *601 Marcia E. Goodman, Marian C. Haney, Jeffrey                      Justice in England which will
S. Fowler (argued), Mayer, Brown & Platt, Chicago,                     have exclusive jurisdiction to
IL, for plaintiff-appellant.                                           determine such disputes.

John L. Conlon (argued), Schwartz, Cooper,                Omron protested that this dispute arose out of
Greenberger & Krauss, Chicago, IL, for defendant-         trademark infringement, not out of the contract,
appellee.                                                 and that Maclaren would have been equally (if not
                                                          more) liable for its conduct had there never been an
Before POSNER, Chief Judge, and CUMJvliNGS and            agreement. To this the district court replied:
EASTERBROOK, Circuit Judges.
                                                                       Because the instant dispute
Opinion                                                                would not have arisen if
                                                                       Omron and Maclaren Exports
EASTERBROOK, Circuit Judge.                                            had never entered into their
                                                                       Distribution Agreement, the
A few years ago the Marshall Baby Products Division
                                                                       case at bar "arises out of'
ofOmron Healthcare became the exclusive distributor,
                                                                       the Distribution Agreement.
in the United States, of baby strollers manufactured
                                                                       The forum selection clause
by Restair Maclaren Limited, a British firm. The
                                                                       in the Distribution Agreement
contract allowed Maclaren to cancel on 90 days' notice.
                                                                       therefore deprives this court
Disappointed by Omron's sales, Maclaren gave notice
                                                                       of jurisdiction over the matter.
terminating the distributorship as of January 22, 1993.
                                                                       Accordingly, the case is
One of Omron's employees left to create a new firm,
                                                                       dismissed with prejudice.
KidCo, which became Maclaren's U.S. distributor.
Omron noticed that KidCo's strollers identified Omron
as the distributor, and it sued Maclaren for trademark     [2]    But-for causation is an unsatisfactory
infringement.                                             understanding of language referring to "disputes
                                                          arising out of' an agreement. Let us suppose that
 [ll When Omron's distributorship ended, Maclaren         while inspecting Omron's facilities, a manager of
had on hand 2,300 strollers that had been manufactured    Maclaren stepped on a baby rattle and fell. Would



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Omron Healthcare, Inc. v. Maclaren Exports Ltd., 28 F.3d 600 (1994)


the ensuing tort litigation go to the High Court of         S.Ct. 1647, 114 L.Ed.2d 26 (1991) (arbitration of
Justice in the United Kingdom just because, but for the     claims under the Age Discrimination in Employment
distribution agreement, none of Maclaren's employees        Act); Carnival Cruise Lines, Inc. v. Shute, 499 U.S.
would have been on Omron's premises? "Arising out           585, Ill S.Ct. 1522, 113 L.Ed.2d 622 (1991) (forum
of' and "arising under" are familiar phrases, and courts    selection clause sending admiralty case to Florida);
have resisted the siren call of collapsing them to but-     Rodrif:ruez de Qu{ias v. Shearson:American Etpress,
for causation. An example: but for the existence of         Inc., 490 U.S. 477, 109 U.S. 1917. 104 L.Ed.2d
federal drug safety standards, it would not be possible     526 ( 1989) (arbitration of claims under the Securities
to contend that noncompliance with the standards is         Act of 1933); Shearson1'American E:Xpress, Inc. v.
tortious, but it does not follow that a tort suit "arises   f\,fcAfahon, 482 U.S. 220, 107 S.Ct. 2332. 96 L.Ed.2d
under" those standards and thus activates federal            185 (1987) (arbitration of claims under the Securities
jurisdiction. i\1errell Dow Pharmaceuticals, Inc. v.        Exchange Act of 1934 and the Racketeer Influenced
 Thompson, 478 U.S. 804, 106 S.Ct. 3229, 92 L.Ed.2d         and Corrupt Organizations Act); 1Hitsubishi .tlfotors
650 (1986). See also, e.g., Spearman v. Exxon Coal          Corp. v. Soler Chrysler-P~vmouth. Inc., 473 U.S. 6 I 4,
 us:~l. Inc .. 16 F.3d 7'22 (7th Cir.1994).                 105 S.Ct. 3346, 87 L.Ed.2d 444 (1985) (arbitration in
                                                            Japan of claims under U.S. antitrust laws); Scherk v.
Nonetheless, the parties' dispute arises out of the         Alberto-Culver Co., 417 U.S. 506, 94 S.Ct. 2449, 41
agreement. Maclaren contends that its conduct in            L.Ed.2d 270 (1974) (arbitration *603 in France of
selling the 2,300 strollers bearing Omron's marks is        claims under the Securities Exchange Act of 1934);
justified by orders Omron placed under the agreement,       The Bremen v. Zapata q[(-Shore Co., 407 U.S. 1, 92
coupled with its refusal to accept delivery. Although       S.Ct. 1907, 32 L.Ed.2d 513 (1972) (forum selection
the distribution agreement does not provide expressly       clause sending admiralty case to High Court of Justice
for the means of wrapping up the parties' affairs           in England); Bonny v. Society ql Lloyd's, 3 F.3d 156
and disposing of unsold inventory, courts regularly         (7th Cir.l993) (forum selection clause sending fraud
imply such terms-not as legal rules independent of          and securities claims to England).
the contract, but as implicit terms under the contract.
When the contracting parties have not provided               (4] We concluded in Sweet Dreams Unlimite(l, Inc.
explicitly for some contingency, courts impute to their     v. Dial-A-1Hattress International, Ltd, 1 F.3d 639.
contract the provisions that they probably would have       642-43 (7th Cir.1993), that all disputes the resolution
adopted had they focused on the subject and resolved        of which arguably depend on the construction of an
it explicitly. These imputed terms are justified not        agreement "arise out of' that agreement for purposes
only by a desire to make contract a more productive         of an arbitration clause. See also Hugel v. Cmporation
institution by holding down the costs of bargaining,        of Lloyd's, 999 F.2d 206 (7th Cir.1993); S+L+H
but also by the parties' knowledge of the common law        S.p.A. v. A/iller-St. Nazianz. Inc .. 988 F .2d 1518 (7th
history of judicial gap-filling. Because these parties      Cir.l993). We cannot imagine why the scope ofthat
did not provide expressly for the disposition of unsold     phrase would differ for purposes of a forum-selection
inventory, they invited a process of construction that      clause. Neither side contends that the phrase has any
will resolve their dispute. A court might say that the      special meaning in this contract, so Sweet Dreams is
agreement implicitly licensed Maclaren to use the           a sufficient answer to Omron's submission. Perhaps
marks incident to a commercially reasonable means           the second circuit has a more restricted view of such
of selling the inventory. There are other possible          language, see Corcovado 1Husic Corp. v. Hollis Afusic,
outcomes, but all depend on an understanding of the         Inc., 981 F .2d 679. 682-83 (2d Cir.1993 ), but in Sweet
parties' written bargain and of its implied terms.          Dreams, 1 F.3d at 642, we expressly disagreed with
                                                            a precursor decision in that circuit, In re Kinoshita
 [3] Omron's claim engages both the parties' compact        & Co., 287 F.2d 951 (2d Cir.1961). When Kinoshita
and the rules of trademark law, but the fact that           was decided, many judges were hostile to sending
the parties' designated forum would have to interpret       questions of U.S. law to arbitration abroad. Although
federal law is no obstacle to the reference. E.g., Gilmer   the panel in Corcovado was not overtly hostile to
v. Interstate/Johnson Lane Corp., 500 U.S. 20, 111          permitting the parties to choose their tribunal, it treated



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Omron Healthcare, Inc. v. Maclaren Exports Ltd .• 28 F.3d 600 (1994)



the fact that the claim would tum on an interpretation      Omron's reminder that the trademark laws are designed
of U.S. copyright law as a dispositive argument in          for the benefit of consumers as well as producers
favor of decision by a federal court. It did not discuss    suggests that third-party interests are at stake. But the
Gilmer or any of the other cases cited in the preceding     antitrust and securities laws also are designed for the
paragraph, and we find it unpersuasive.                     benefit of consumers; indeed, we suppose that all U.S.
                                                            laws may be said to serve the interests of (some) U.S.
 (51 According to Omron, sending this dispute to            nationals. Does it follow that disputes that turn on
England would offend the public policy of the United        the resolution of U.S. law must be decided in U.S.
States. What policy, in particular? The dominant            courts? If so, then Scherk, Mitsubishi, and many other
policy in contract cases is enforcing the parties'           *604 cases are wrongly decided, for they depend
agreement, the better to promote commerce. Bremen,          on the belief that foreign tribunals will interpret U.S.
407 U.S. at 9, 92 S.Ct. at 1912-13; see also In re Oil      law honestly, just as the federal courts of the United
Spill by the Amoco Cadi::. 954 F.2d 1279, 1327-30           States routinely interpret the law ofthe states and other
(7th Cir.1992). American firms can hardly expect to         nations.
do international business if American courts permit
them to welch on their commitments to their trading          (6] What is more, Omron cannot really tell us that
partners.                                                   third-party interests are so dominant that they must
                                                            be protected from parties' voluntary bargains. Omron
Omron tells us that the "policies" in question favor        could have licensed Maclaren to use its trademarks for
sending disputes to courts that have the expertise to       the 2,300 strollers. Omron fears that the High Court of
resolve them, and ensuring that courts with the interest    Justice is more likely to rule in favor of a U.K. national
of Americans at heart interpret laws designed for the       than a court of this nation would be. We doubt that
protection of American consumers. Notice that neither       the commercial judges of the High Court, for whom
of these policies has a secure footing in any statute.      international transactions are routine business, display
Public-policy arguments depend on the fact that "no         such a bias-but, if they do, so what? Omron knew
court will lend its aid to one who founds a cause of        this when it signed the contract, and it would have
action upon an immoral or illegal act". Paperworkers        received some compensation for the risk (a lower price
v. iHisco, Inc .. 484 U.S. 29, 42, 108 S.Ct. 364, 373,      of strollers, some procedural concession). If Omron
98 L.Ed.2d 286 (1987). Contracts that violate the           is free to allow Maclaren to win with certainty by
rights of third parties aren't enforced; neither are        licensing its marks, a slight increase in the probability
agreements designed to get 'round statutes that protect     of Maclaren's prevailing cannot be objectionable. This
the contracting parties from their own improvidence.        case is about how much money changes hands between
But litigating in England is neither immoral nor illegal,   these parties, and not about the protection of American
and no law or policy of the United States demands           consumers. Compare the Sherman Act, which bars
that every dispute be litigated in the tribunal with the    firms from agreeing to fix prices no matter how much
most experience-if that were so, jurisdiction based on      all of them want to do so, and the securities acts,
diversity of citizenship would be abolished (for state      which forbid contractual waiver of their provisions. 15
courts have more experience with their own law than         U.S.C. §§ 1, 77n, 78cc(a). Here are real restrictions on
federal courts do), federal defenses to claims filed        the power of contract-yet the Supreme Court has held
in state court would all be removed to federal court,       that antitrust and securities cases may be arbitrated in
and the courts of the United States would disclaim          foreign nations.
any power to adjudicate disputes under foreign law.
Yet all of these things are common, even in cases of        Omron signed a contract promising to litigate
exceptional complexity. In Amoco Cadiz we devoted           in the High Court of Justice, or not at all. It
great energy to interpreting the law of France and          broke that promise. Instead of seeking damages for
the United Kingdom, without suggesting that we were         breach of contract, Maclaren is content with specific
violating a "public policy" of confining disputes to the    performance. The district court properly dismissed the
tribunals with the most expertise.                          suit.




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Omron Healthcare, Inc. v. Maclaren Exports Ltd.J 28 F.3d 600 (1994)



AFFIRMED.                                             All Citations

                                                      28 F.3d 600, 31 U.S.P.Q.2d 1376


 End of Document                                         © 2015 Thomson Reuters. No claim to original U.S. Government Works.




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Interactive Music Technology, LlC v. Roland Corp. U.S., Not Reported in F.Supp.2d •..




                                                         Accordingly, it is 0 RDERED that Defendant Roland's
                  2008 WL 245142
                                                         motion to transfer (Doc. No. 19); Defendant Yamaha
Only the Westlaw citation is currently available.
                                                         Corporation of America's Motion to Transfer Pursuant
         United States District Court,
                                                         to 28 U.S.C. § 1404(a) (Doc. No. 25); and Defendant
                 E.D. Texas,
                                                         Open Labs, Inc.'s Motion to Transfer Venue Pursuant
               Tyler Division.
                                                         to 28 U.S.C. § 1404(a) (Doc. No. 38) are GRANTED
  INTERACTIVE MUSIC TECHNOLOGY, LLC                      pursuant to 28 U.S .C. § 1404(a), and Defendant
                         v.                              Roland's motion to dismiss is DENIED.
            ROLAND CORP. U.S., et al.
                                                         So ORDERED.
             Civil Action No. 6:07-CV-
             282.    I Jan. 29, 2008.
                                                             REPORT AND RECOMMENDATION OF
Attorneys and Law Firms
                                                             UNITED STATES MAGISTRATE JUDGE
Ronald P. Oines, Rutan & Tucker, Costa Mesa, CA,
                                                         JOHN D. LOVE, United States Magistrate Judge.
Jennifer Parker Ainsworth, Wilson Sheehy Knowles
Robertson & Cornelius PC, Tyler, TX, for Plaintiff.      Before the Court are Defendant Roland Corporation
                                                         U.S.'s Motion to Dismiss Pursuant to Fed.R.Civ.P.
Charles W. Goehringer, Jr., Lawrence Louis Germer,
                                                         12(b)(3) For Plaintiffs Failure to Abide by Contractual
Germer Gertz, L.L.P ., Beaumont, TX, Gregory P.
                                                         Forum Selection Clause (Doc. No. 19); Defendant
Kom, Jonathan Steinsapir, Lawrence Y. Jser, Kinsella
                                                         Yamaha Corporation of America's Motion to Transfer
Weitzman Iser Kump & Aidisert, Santa Monica, CA,
                                                         Pursuant to 28 U.S.C. § 1404(a) (Doc. No. 25); and
Bryan Russell Hm1on, Kincaid Horton & Smith,
                                                         Defendant Open Labs, Inc.'s Motion to Transfer Venue
Austin, TX, 1\llelvin R. Wilcox, III, Smead Anderson &
                                                         Pursuant to 28 U.S.C. § 1404(a) (Doc. No. 38).
Dunn, Longview, TX, Ivfartin .M. Noonen, Vincent J.
Belusko, Morrison & Foerster LLP, Los Angeles, CA,
                                                         For the following reasons, Defendant Roland Corp.'s
for Defendants.
                                                         (hereinafter "Roland") motion to dismiss should
                                                         be DENIED.However, Defendants Roland, Yamaha
                                                         Corp. (hereinafter "Yamaha") and Open Labs, Inc.'s
           ORDER ADOPTING REPORT                         (hereinafter "Open Labs") motions to transfer venue
            AND RECOMMENDATION                           should be GRANTED.
            OF MAGISTRATE JUDGE

LEONARD DAVIS, District Judge.
                                                                           BACKGROUND
 *1 The above entitled and numbered civil action
was referred to United States Magistrate Judge           On May 10, 2004, Interactive Music Technology
John D. Love pursuant to 28 U.S.C. § 636. The            (hereinafter "IMT") initiated patent infringement
Report and Recommendation of the Magistrate              proceedings against Roland in the U.S. District Court
Judge, which contains his proposed findings of           for the Central District of California (hereinafter
fact and recommendations, has been presented for         "the California proceeding"). In the California
consideration (Doc. No. 57). The parties did not file    proceeding, IMT alleged infringement of U.S. Patent
any objections to the Report and Recommendation.         No. 5,908,997 1 (hereinafter "the ,997 patent"), a
The Court is of the opinion that the findings and        patent which relates to electronic musical instruments
conclusions of the Magistrate Judge are correct.         containing a computer-based control system. The case
Therefore, the Court hereby adopts the Report and        was assigned to U.S. District Judge John F. Walter.
Recommendation of the United States Magistrate
Judge as the findings of this Court.



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Interactive Music Technology, LLC v. Roland Corp. U.S., Not Reported in F.Supp.2d ..•


During the course of the California proceeding, the           the covenant not to sue in the California proceeding
parties filed answers and counterclaims and appeared          settlement agreement. Pl.'s Opp'n Def.'s Mot. Dismiss
before Judge Walter for a scheduling conference,              1. Roland filed a motion to dismiss for IMT's failure
but the California court never held a Markman                 to comply with the contractual forum selection clause,
hearing or interpreted any of the language in the             and in the alternative, Roland requests a venue transfer
,997 patent. 2 After a year of litigation, the parties        for convenience purposes pursuant to 28 U.S.C. §
settled the dispute, with IMT taking nothing on the           l404(a). Defendants Yamaha and Open Labs have
complaint and covenanting not to sue Roland on the            filed their own motions seeking to transfer the case to
,997 patent except in certain limited circumstances. As       the Central District of California pursuant to § 1404(a).
part of their settlement, Roland and IMT included a
venue provision for any further disputes, stating that        In considering a motion to transfer pursuant to §
"venue over any dispute arising out of this Agreement         l404(a) in a patent infringement case, the Federal
shall lie in the state or federal courts sitting in Los       Circuit applies the law of the regional circuit, which in
Angeles or Orange County, California."See Def.'s              this case is the Fifth Circuit. See Storage Tech. Cmp.
Mot. Dismiss 1, Ex. 4 at 4; Settlement Agreement at           v. Cisco .S)•s., Inc., 329 F.3d 8:23. 836 (Fed.Cir.2003 ).
4, Interactive Music Tech., LLC v. Roland Corp., Case
No. CV 04-03285 JW (C.D.Cal.2005). Pursuant to
                                                              I. The Forum Selection Clause
the settlement agreement, Judge Walter dismissed the
                                                              Parties may designate by contract a forum in which
case in a one page order, but noted that the Central
                                                              any litigation is to take place. Ke,..,·smann and Assocs..
District of California "retains full jurisdiction over this
                                                              Inc. v. Barton-·-,'lschman Assocs., Inc., lO F.Supp.2d
action."Interactive Music Tech., LLC v. Roland Corp.,
                                                              682, 688 (S.D.Tex.l997). Any lawsuit commenced
Case No. CV 04-03285 JW; (Doc. No. 22).
                                                              elsewhere may then be subject to dismissal for
                                                              improper venue.ld (citing Carnival Crui.s·e Lines, Inc.
 *2 IMT is a Wyoming corporation, Yamaha and
                                                              v. Shute, 499 U.S. 585, 111 S.Ct. 15:22, 113 L.Ed.2d
Roland are California corporations, and Open Labs
                                                              622 (1991)). The law favors enforcement of forum
is a Texas corporation headquartered in Austin,
                                                              selection clauses, and the U.S. Supreme Court has
Texas. 3 SeeVanKoeveringDecl. ~2-4;Def. Yamaha                held that forum selection clauses are "prima facie
Mot. Transfer at 1. There is some uncertainty about           valid and should be enforced unless enforcement is
where the inventors, all likely witnesses, currently          shown by the resisting party to be 'unreasonable' under
reside. According to IMT, the nine inventors of the           the circumstances."D.B. Inc. v. Nat'/ Admin. Solutions
patents-in-suit are located in Texas (though not in           Corp., :2004 WL 86584:2, at* 1 (N.D.Tex.:2004) (citing
the Eastern District of Texas), Tennessee, Iowa, and          lvl·'S Bremen v. Zapata Ofj.s·hore Co., 407 U.S. l, 10,
Illinois. Pl.'s Opp'n Def. Yamaha's Mot. Transfer 2;          92 S.Ct. 1907,32L.Ed.2d 513 (1972)).
(Doc. No. 32). Yamaha asserts that three inventors
have since moved from the locales in which IMT                As noted above, Roland and IMT included a forum
claims they live, and notes that some may have moved          selection clause in their agreement settling the
to California. Def. Yamaha Reply Br. Supp. Mot.               California proceeding. The language at issue states that
Transfer 1 (citing Noonen Reply Declaration,~~ 2-7            "venue over any dispute arising out of this Agreement
and Exhs. A-B).                                               shall lie in the state or federal courts sitting in Los
                                                              Angeles or Orange County, California."See Def.'s
                                                              Mot. Dismiss 1, Ex. 4 at 4; Settlement Agreement
                      ANALYSIS                                at 4, Interactive Music Tech., LLC v. Roland Corp.,
                                                              Case No. CV 04-03285 JW (C.D.Cal.2005). IMT
IMT filed the present suit in the U.S. District Court for     does not argue that enforcement of the agreement
the Eastern District of Texas, asserting that Defendants      is unreasonable, only that the settlement agreement
Roland, Yamaha and Open Labs are actively infringing          does not cover the products it asserts are infringing in
the patents-atissue. IMT claims the present case              the present litigation. IMT bases its argument on two
involves products that did not exist at the time of the       points, which are the primary issues before the Court.
California proceeding, and which are not subject to           First, IMT argues the "venue ... shall lie" language of


                                                                             Government \f\Jorks.
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                                                                                                                           R407
Interactive Music Technology, LLC v. Roland Corp. U.S., Not Reported in F.Supp.2d ...


the forum selection clause is permissive rather than        context specific, the Tenth Circuit found a general
mandatory, meaning the clause allows, but does not          uniformity in the federal courts when analyzing
require, litigation in the federal courts within Los        the law on this matter: where venue is specified
Angeles or Orange County, California. Second, IMT           in a forum selection clause with mandatory or
claims its infringement action does not arise out of the    obligatory language, the clause will be enforced,
settlement agreement. For its part, Roland argues the       while where only jurisdiction is specified, the clause
present action should be dismissed or transferred to        will generally not be enforced without some further
California pursuant to the mandatory forum selection        language indicating the parties' intent to make venue
clause in the settlement agreement.                         exclusive. 4 K & V Scientific Co., li1c. v. Bayerische
                                                            itfotoren Werke Aktiengesellschqti, 314 F.3d 494,
                                                            499 (lOth Cir.2002) (emphasis added). However,
A. Mandatory v. Permissive Forum Selection
                                                            merely mentioning venue in the forum selection clause
Clauses
                                                            does not make the clause mandatory by itself. See
 *3 Before determining whether a forum selection
                                                            Bentley v. 1\futual Benejlts Corp., 237 F.Supp.2d
clause should be enforced, the Court must first
                                                            699, 702 (S.D.!v1iss.2002) (fmding clause providing
determine whether the clause is mandatory or
                                                            "[t]his Agreement shall be construed under the laws of
permissive.Ca/das & Sons, Inc. v. 1'Villinham, 17
                                                            Florida, and the parties stipulated to venue in Broward
F.3d 123, 127 (5th Cir.1994 ). A party's consent to
                                                            County," was permissive because the parties merely
jurisdiction in one forum does not necessarily waive
                                                            agreed to a venue without excluding others). Also, the
that party's right to have an action heard in a different
                                                            Fifth Circuit has stated that even though a clause uses
forum. Dorsey v. Northern L{f'e Ins. Co., 2004 \VL
                                                            the term "shall," which is generally mandatory, the
2496214, at *3 (E.D.La.2004). In examining forum
                                                            clause need not necessarily be classified as mandatory.
selection clauses, courts must examine the language
                                                            Caldas & Sons, Inc., 17 F.3d at 127.Even when venue
of the clause and determine whether or not the forum
                                                            is specified and "shall" is used, the language of the
selection clause evidences an intent of the parties' to
                                                            clause must be examined thoroughly to determine if
limit the scope of jurisdiction or venue to a particular
                                                            the parties intended for the specified forum to be
forum, or whether an ambiguity exists. {'ity of NeH'
                                                            exclusive.
Orleans v. J:!unicipal Admin. Sen .. Inc., 376 F.3d
501, 504 (5th Cir.2004) ("For a forum selection
                                                             *4 Nevertheless, the combination of specified venue
clause to be exclusive, it must go beyond establishing
                                                            and obligatory language is a powerful combination.
that a particular forum will have jurisdiction and
                                                            A review of forum selection cases in the Fifth
must clearly demonstrate the parties' intent to make
                                                            Circuit reveals that the Fifth Circuit courts appear to
that jurisdiction exclusive"). Where an agreement
                                                            be overwhelmingly in line with the Tenth Circuit's
contains clear, unequivocal and mandatory language
                                                            observation in K & v. Scientific, as the Fifth Circuit
showing that jurisdiction is appropriate only in a
                                                            and District Courts within the Circuit have consistently
designated forum, the clause is considered mandatory.
                                                            found that specified venue in conjunction with
Von Grqffenreid v. Craig, 246 F.Supp.2d 553, 560
                                                            obligatory language (such as the term "shall") in
(N.D.Tex.2003); Dorsey, 2004 WL 2496214. at *3.
                                                            a forum selection clause mandates venue wherever
On the contrary, permissive forum selection clauses
                                                            specified. See, e.g., Collin County. Tex. v. Siemens Bus.
authorize jurisdiction in the designated forum, but do
                                                            Serv., Inc .. 2007 WL 2908926, at *4 (5th Cir.2007)
not prohibit litigation elsewhere. Von (}rqffenreid, 246
                                                            ("Here, it is undisputed that the venue clause at
F.Supp.2d at 560.Whenever a forum selection clause
                                                            issue [, which states venue 'shall lie exclusively
contains an ambiguity, the clause must be construed
                                                            in Collin County, Texas,'] is mandatory"); Kevlin
against the drafter. Keaty v. Freeport Indonesia. Inc.,
                                                            .S'ervs., Inc. v. Lexington State Bank, 46 F.3d 13.
503 F.2d 955, 957 (5th Cir.l974) (per curiam).
                                                            l4-15 (5th Cir.l995) (finding mandatory a forum
                                                            selection clause stating: "The legal venue of this
The distinction between specifying jurisdiction and
                                                            contract and any disputes arising from it shall be
venue in forum selection clauses is often important.
                                                            settled in Dallas County, Texas"); In re fireman's
While analyzing a forum selection clause is extremely
                                                            Fund Ins. Co., 588 F.2d 93, 93-···-94 (5th Cir.1979)



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(finding clause stating that "any suit or action for         venue to which they may be entitled by virtue of
the enforcement of any of the obligations under this         domicile or otherwise").
agreement, the venue of such suit or action shall be
laid in the County ofEssex and State ofNew Jersey" is         *5 IMT's argument is unavailing, as it ignores Fifth
mandatory); Dorsr..~v. 2004 WL 2496214. at *4("[T]he         Circuit and District Court cases where the "venue
forum selection clause provides that 'venue shall be         shall" language is found to be mandatory without
laid in King County, Washington.'The Court finds             further language indicating exclusivity. See, e.g.,
that the forum selection clause is unambiguous with          Kevlin Servs., Inc., 46 F.3d at 14···-15; In re Fireman~s
respect to exclusivity and it is, therefore, mandatory.");   Fund Ins. Co., 588 F.2d at 93-94; Dorsey. 2004 'VL
First Nat'/ of N. Am., LLC v. Pem:v. 2002 WL                 2496214. *4; Greenville Elec. Uti!. S)'S., 2001 WL
449582 (N.D.Tex.2002) (holding that forum selection          804521, * 1-2; Taylor, 474 F.Supp. At 146-48. While
clause providing that "all claims shall be litigated only    it is true that parties must do more than just name
in Collin County, Texas" was a mandatory clause              a venue, and also that generally mandatory terms
requiring venue in state court in Collin County);            such as "shall" do not necessarily make a forum
Greenville Elec. Uti/. .S):s. v. N. Pac. Group, Inc.,        selection clause mandatory, there is no reason to
200 l \VL 804521 (N.D.Tex.200l) (finding that clause         think the parties in the present circumstance meant
providing that "venue for any litigation arising from        to allow for other venues. By stating "[v]enue over
this contract shall lie in Greenville, Hunt County,          any dispute arising out of this Agreement shall lie in
Texas" mandatory); Taylor v. Titan Mid1-Pest Const.          the state or federal courts sitting in Los Angeles or
Corp., 474 F.Supp. 145, 146, 148 (N.D.Tex.l979)              Orange County, CA," the parties left no ambiguity
(transferring action and enforcing forum selection           as to their intent to resolve all disputes arising out
clause providing that "if any controversy or claim           of the agreement in the specified California courts.
arises out of or relates to this Subcontract or any          Interpreting the clause to include the federal court in
alleged breach thereof jurisdiction and venue shall be       the Eastern District of Texas would be a strained and
in the appropriate Court ... sitting within the County in    unsupported interpretation. See b?ftnite Tech., 200 l
which the principal offices of Contractor are located").     \VL 527357, at *2. Accordingly, the Court finds the
                                                             parties' forum selection clause to be mandatory rather
In their brief, IMT argues that the "venue ...               than permissive.
shall lie" language is not exclusive. Citing multiple
cases as support, IMT argues that further limiting
language such as "venue shall only lie" or "venue            B. "Arising Out Of'
shall lie exclusively in" is necessary to truly              The second major issue before the court is whether
                                                             or not the present dispute arises out of the settlement
remove ambiguity from the phrase. 5 See, e.g., .Art,ry;fl
                                                             agreement such that the forum selection clause
Equities LLC v. Paolino, 211 F. App'x 317,
                                                             mandates litigation in California. IMT argues its patent
318 (5th Cir.2006) (finding as mandatory forum
                                                             infringement claims in the present case do not arise out
selection clause stating: "Borrower hereby consents
                                                             of the California proceeding's settlement agreement,
to the exclusive jurisdiction of the courts sitting in
                                                             and therefore, the present action is not governed by
Kendall County, Texas") (emphasis added); lvlaley v.
                                                             the forum selection clause. Roland counters by arguing
Design Benejits Plan, b1C:., 125 F.Supp.2d 836, 838
                                                             that IMT's ability to bring its infringement suit against
(E.D.Tex.2000) (finding as mandatory forum selection
                                                             Roland based on the ,997 patent depends entirely
clause stating: "Venue for any action, suit or other
                                                             on the interpretation of the settlement agreement,
proceeding, including non-contract disputes, shall be
                                                             and therefore the present dispute arises out of the
exclusively in Winnebago County, Illinois") (emphasis
                                                             settlement agreement. With limited guidance from the
added); Dixon v. 1~S'E International, Inc., 330 F.3d
                                                             Fifth Circuit on this matter, the parties have turned to
396, 397 (5th Cir.2003) (finding as mandatory forum
selection clause stating: "The Courts of Texas, U.S.A.,      other Circuits' analyses. 6
shall have jurisdiction over all controversies with
respect to the execution, interpretation or performance      IMT bases its position on a Second Circuit copyright
of this Agreement, and the parties waive any other           case decided this year. In Phillips v. Audio Active Ltd,



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494 F.3d 378 (2d Cir.2007), the forum selection clause       whether "any dispute" arises out of the agreement.
before the court stated that "any legal proceedings that     There is no doubt that a dispute exists regarding
may arise out of [the agreement] are to be brought           interpretation of the parties' agreement. According to
in England."The Phillips court examined the phrase           the parties' settlement agreement, IMT cannot bring
"arise out of," which the court found means "to              suit against Roland based on infringement of the ' 997
originate from a specified source," and determined the       patent except in limited circumstances. Roland argues
copyright infringement claims brought by the plaintiff       IMT's infringement action, and more specifically the
did not "arise out of' the pertinent agreement. Id at        allegedly infringing product IMT asserts, is within
386-389.The Phillips court found that the plaintiffs         the scope of the parties' settlement agreement. IMT
claims arose out of the Copyright Act instead of             claims the product-atissue did not exist at the time of
the agreement, thereby rendering the forum selection         the prior agreement, and the terms of the settlement
clause inapplicable to the plaintiffs ability to bring       agreement therefore do not cover the products at
infringement allegations in New York instead of              issue. If Roland is correct that the agreement does
England. IMT contends the Phillips analysis should           in fact cover the products at issue, then IMT will
govern the present issues, and that under Phillips,          be barred from continuing with this proceeding.
its rights as a patent holder do not arise out of            However, should the terms of the agreement not cover
the settlement agreement, and therefore the forum            the product-at-issue, then IMT may have the right
selection clause should not bar it from bringing the         to continue infringement litigation against Roland
present action in the Eastern District of Texas.             on the ,997 patent, but only so long as the action
                                                             falls within the limited circumstances provided for
 *6 Roland turns to the Seventh Circuit for its position.    in the settlement agreement. 7 Though the rights IMT
In Omron Healthcare, Inc. v. Afac/aren Exports Ltcl.         is seeking to vindicate arise from patent law, the
28 F.3d 600, 603 (7th Cir.l994), the Seventh Circuit         contractual relationship governs the circumstances
was faced with a forum selection clause stating:             under which IMT may sue Roland, and therefore
"The parties hereto agree that all disputes arising          IMT's ability to bring suit implicates the agreement.
out of this Agreement which cannot be resolved               Kessmann & Assocs., Inc. v. Barton-AschmanAssocs.,
amicably between the parties shall be referred to the        Inc .. 10 F.Supp.2d 682, 688 (S.D.Tex.l997) ("Claims
High Court of Justice in England which will have             that arise out of the contractual relationship and
exclusive jurisdiction to determine such disputes."/d        implicate the agreement are subject to the forum
at 601-02. The Omron court determined that "all              selection clause"). The issue cannot be resolved
disputes the resolution of which arguably depend on          without interpreting the prior agreement. Therefore,
the construction of the agreement 'arise out of that         under the Omron approach, because the resolution of
agreement for purposes" of a forum selection clause.         this issue depends on interpretation of the agreement,
Id Roland contends the dispute before the Court is           the dispute "arises out of' the agreement.
whether the products accused of infringing are covered
by the California proceeding's settlement agreement,          *7 The Court recognizes that Omron is not
and such a dispute arises of the settlement agreement.       binding authority. However, the Omron analysis
                                                             leads to the more logical conclusion in the present
The Court finds the Seventh Circuit's analysis and
                                                             circumstances. 8 By following the Second Circuit's
conclusion more applicable to the present situation.
                                                             approach in Phillips to its conclusion in the present
As part of the settlement agreement of the California
                                                             case, the forum selection clause is rendered virtually
proceeding, IMT and Roland freely bargained for the
                                                             meaningless, as a plaintiff would always be able to
inclusion of the forum selection clause. According to
                                                             characterize a claim as arising out of patent law, and
that clause, "venue over any dispute arising out of this
                                                             thereby effectively sidestep the agreement. Allowing
Agreement shall lie in the state or federal courts sitting
                                                             this approach under the present circumstances would
in Los Angeles or Orange County, California."In
                                                             ignore the freely bargained-for exchange of two
examining the plain language of the clause, the key
                                                             sophisticated entities. IMT seeks to characterize the
question to determine when the clause is triggered is
                                                             bargained-for forum selection clause as applying only
not whether the claims arise out of the agreement, but
                                                             when the cause of action arises out of the agreement


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itself, such as a breach of the settlement agreement,       federal question, and therefore the federal courts will
and not when the cause of action springs from another       be the appropriate venue. The proper procedure for
body oflaw (such as patent law) outside the agreement.      enforcing the clause is therefore through § 1404(a), and
Roland, however, is asserting that IMT has breached         the Court will therefore analyze the motion entirely
the settlement agreement by filing suit on products         under § 1404(a).
covered under the terms of the settlement agreement.
Thus, in fact, the parties do have a dispute arising out     *8 Under § 1404(a), a district court must weigh a
of the settlement agreement.                                number of factors. The presence of a forum selection
                                                            clause is "a significant factor that figures centrally into
The U.S. Supreme Court has noted a strong preference        district court's calculus. Stel·mrt Org., Inc. v. Ricoh
for enforcing valid forum selection clauses. See A1'S       Corp.. 487 U.S. 22, 29, 108 S.Ct. 2239, 101 L.Ed.2d
Bremen, 407 U.S. at 1O.Neither party has challenged         22 (1988); Brock v. BasA:in-·Robbins USA Co., 113
the validity of the clause, only its applicability.         F.Supp.2d 1078~ 1084 (E.D.Tex.2000). Although the
The Court has reviewed the parties' assertions and          forum selection clause is a significant factor in the
arguments over the settlement agreement's terms,            transfer analysis, on its own it is not sufficient to justify
and found a genuine dispute exists regarding the            transfer. Canvas Records, Inc.. 2007 WL 1239243, at
applicability of the settlement agreement's covenant        *5."The forum selection clause, which represents the
not to sue to the present litigation. Accordingly, the      parties' agreement as to the most proper forum, should
Court fmds there to be a dispute that "arises out of' the   receive neither dispositive consideration .. . nor no
settlement agreement, and the forum selection clause        consideration, but rather the consideration for which
must be given full effect.                                  Congress provided in § l404(a)."Stewart Org., Inc.,
                                                            487 U.S. at 31.

C. Enforcing the Clause
Where the designated venue in a forum selection             II. Motion to Transfer Venue
clause is another federal court, the majority of District   Section 1404(a) provides that "[f]or the convenience
Courts in the Fifth Circuit have interpreted Supreme        of parties and witnesses, in the interest of justice,
Court and Fifth Circuit precedent to mean the proper        a district court may transfer any civil action to any
way to enforce the clause is through a venue transfer       other district or division where it might have been
pursuant to 28 U.S.C. § 1404(a), and not dismissal          brought." 10 See28 U.S.C. § 1404(a). The goals of§
for improper venue pursuant to Rule l2{b)(3) and             l404(a) are to prevent waste of time, energy, and
28 U.S.C. § l406(a). 9 See Southeastern Consulting          money, and also to protect litigants, witnesses, and
Group, Inc. v. 1Hatimus, Inc .. 387 F.Supp.2d 681,683-      the public against unnecessary inconvenience and
84 (S.D.Miss.2005); Speed v. Omega Protein, Inc ..          expense. Vau Dusen v. Barrack, 376 U.S. 612, 616,
246 F.Supp.2d 668, 671 (S.D.Tex.2003); Ellington            84 S.Ct. 805, ll L.Ed.2d 945 (1964). Ultimately it
Credit Fund, Ltd. v. Select Portfblio Serv., lnc.,          is within a district court's sound discretion to transfer
2007 \\'1., 3256210, at *4 (\V.D.Tex.2007); Wali\fart       venue pursuant to 28 U.S.C. § 1404(a), but the court
Stores, Inc. v. Oore, Inc .. 2007 \VL 2769835, at           must exercise its discretion in light of the particular
*2 (N.D.Miss.2007); Canvas Records. Inc. v. Koch            circumstances of the case. Hanby v. Shell Oil Co.,
Entm't Distrib., LLC, 2007 WL 1239243, at *5                144 F.Supp.2d 673,676 (E.D.Tex.200l); i'\tfohamedv.
(S.D.Tex.2007); Gutermuth lnv., Inc. v. Coo/brands          Afazda Cmp., 90 F.Supp.2d 757, 768 (E.D.Tex.2000).
Smoothies, 2006 \VL 2933886. at *3 (W.D.Tex.2006);
Dorsey v. Northern Life lns. Co., 2004 WL 2496214,          When deciding whether to transfer venue, a district
at *9 (E.D.La.2004).                                        court balances two categories of interests: (1) the
                                                            convenience of the litigants (or private interest
Defendants moved to dismiss the case pursuant to Rule       factors), and (2) the public interests in the fair and
12(b)(3 ), or alternatively pursuant to § 1404(a) or §      efficient administration of justice. In re Volkswagen
1406(a). Although the forum selection clause provides       ofAmerica. inc .. 506 F.3d 376, 384 (5th Cir.2007);
for the state or federal courts, patent infringement is a   Hanby, 144 F.Supp.2d at 676.The private interest



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factors weighed by the court include: (1) the plaintiffs      agreed on a forum, the parties themselves presumably
choice of forum, (2) the relative ease of access to           already accounted for a number of the factors in
sources of proof, (3) the availability of compulsory          bargaining for the terms of the agreement and settling
process to secure the attendance of witnesses, (4) the        on the Central District of California as the best
cost of attendance for willing witnesses, and (5) all         place to continue litigation when required. If ease of
other practical problems that make trial of a case            access to sources of proof, availability of compulsory
easy, expeditious and inexpensive. In re Volkswagen           process to secure the attendance of witnesses, cost of
q(America, Iuc .. 506 F.3d at 380.The public interest         attendance for willing witnesses, and the familiarity
factors include: "(1) the administrative difficulties         of the forum with the law that will govern the case
flowing from court congestion, (2) the local interest         were more convenient for the parties elsewhere, the
in having localized interests decided at home, (3)            parties could have agreed to that at the time. Of
the familiarity of the forum with the law that will           course, the parties could also have agreed not to
govern the case, and (4) the avoidance of unnecessary         specify a venue for continued litigation. Also, a change
problems of conflict of laws or in the application of         in circumstances could certainly have rendered the
foreign law."/d                                               parties' forum selection determination less convenient
                                                              now than it was at the time of settlement, but that
None of the factors are dispositive on their own. One         is not the case here. Nothing has happened since the
of the factors, the plaintiffs choice of forum, is entitled   California proceeding that makes the Eastern District
to a certain level of deference, and "this deference          of Texas a more appropriate venue.
establishes the burden that a moving party must meet
in seeking a § 1404(a) transfer."/d A party seeking           Only the deference given to IMT's choice of forum
transfer 'must show good cause,' which according to           weighs against transfer. Factors such as ease of
the Fifth Circuit means "that a moving party must             access to sources of proof, availability of compulsory
demonstrate that a transfer is '[f]or the convenience of      process to secure attendance, the cost of attendance for
parties and witnesses, in the interest ofjustice.' " Id A     willing witnesses, administrative difficulties flowing
transfer should be ordered "when the transferee forum         from court congestion, the local interest in deciding
is clearly more convenient," but a plaintiffs choice of       the dispute at home, and the avoidance of conflict
forum should not be disturbed "when the transferee            of law problems all either play neutral or weigh
forum is no more convenient than the chosen forum."           slightly in favor of transfer. More importantly, certain
/d                                                            factors weigh significantly in favor of transfer, such
                                                              as the familiarity of the forum with the governing
 *9 Because of the presence of the forum selection            law. Though Judge Walter never held a Markman
clause between IMT and Roland, but not IMT and                hearing or construed the terms in the patent, he
the other Defendants, two separate analyses under §           nonetheless has already invested judicial time and
1404(a) are required.                                         resources into this case. In his order dismissing the
                                                              case, Judge Walter noted that the Central District
                                                              of California "retain[ed] full jurisdiction over this
A. Roland's Motion to Transfer                                action."While IMT claims that phrase was included
While all of the factors are always pertinent in any §        solely because the settlement agreement was not
1404(a) analysis, the disposition ofRoland's motion to        fmalized, the issues before the Court today concern
transfer ultimately amounts to two major competing            interpretation of the forum selection clause, and are
components: the deference afforded to IMT's choice            in essence a continuation of the finalization of the
of forum versus the weight of the mandatory forum             previous case's settlement agreement. Furthermore,
selection clause bargained-for by Roland and IMT.             while both the Eastern District of Texas and the
The presence of the forum selection clause looms              Central District of California maintain heavy patent
large in the§ 1404(a) transfer analysis, and "provides        dockets (and therefore equivalent familiarity with
some indication that the convenience of the parties           patent law), the interpretation of the parties' settlement
would presumably be better served by transfer."Elliott        agreement, which is governed under California law,
v. Carnival Cruise Lines, 213 F.Supp.2d 555, 561              will ultimately determine whether or not IMT will
(S.D. Tex.2002). Given that the parties previously


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be barred from proceeding with the present patent         problems, both public factors, have been presented to
infringement action. Not only will the Central District   the Court. Also, the allegedly infringing products are
of California judges be better versed in applying         sold in both districts, so both California and Texas have
California law, Judge Walter also will have specific      an interest in deciding the issues at home. Both districts
familiarity with the intent of the parties' in their      also maintain heavy patent dockets, neutralizing the
settlement agreement. 11                                  familiarity of the forum factor with the governing law.


  *10 When viewed as a whole, the forum selection         Once again, the only factor weighing against transfer
clause and familiarity of the forum with the law that     is IMT's choice of forum. Nonetheless, that choice
will govern the case outweigh IMT's choice of forum,      of forum is given deference, and another forum must
which is the only factor lending any significant weight   be "clearly more convenient" to disturb that choice.
against transfer. The effect of the forum selection       A court should consider the choice of forum, but the
clause operates to mandate litigation between Roland      plaintiffs forum choice by itself is not conclusive or
and IMT in the Central District of California. In light   determinative. In re Horseshoe Entm't, 337 F.3d 429,
of the Supreme Court's strong preference for enforcing    434 (5th Cir.2003). While a number of the factors
valid forum selection clauses, and considering all of     are neutral, one factor weighs heavily in favor of
the appropriate factors and the effect of the forum       transfer: judicial economy. It is well established that
selection clause, the Court finds that the interests of   the public interest factors in a § 1404( a) analysis
justice and the convenience of the parties would be       encompass the interest of justice.Zo/tar Satellite Sys..
better served in the Central District of California.      Inc. v. LG Elec. LHobile Commc'ns, 402 F.Supp.2d 731,
The proper enforcement by this Court is to transfer       735 (E.D.Tex.2005)."Consideration of the interest of
the case to the appropriate venue pursuant to §           justice, which includes judicial economy, 'may be
 l404(a) rather than dismiss Roland based on the          determinative to a particular transfer motion, even if
forum selection clause. See Stewart Org., Inc., 487       the convenience of the parties and the witnesses may
U.S. at 29-30.Accordingly, the Court recommends           call for a difference result."'Jd (quoting Regents of
Roland's motion to transfer pursuant to § 1404(a) be      the Univ. ql Cal. v. Eli Lilly & Co., 119 F.3d 1559,
GRANTED, and its motion to dismiss pursuant to Rule        1565 (Fed.Cir.1997)). In cases that involve a highly
 12(b)(3) be DENIED.                                      technical subject matter, such as patent litigation,
                                                          judicial economy may favor transfer to a court that is
                                                          already familiar with the issues involved in the case.Jd
B. Yamaha and Open Labs' Motions to Transfer
The analysis of the traditional § 1404(a) factors          *11 While Yamaha and Open Labs were not
for Defendants Yamaha and Open Labs' motions              defendants in IMT's previous litigation on the
to transfer is much the same as the analysis for          patents at issue against Roland, Judge Walter
Roland's motion (without the presence of the forum        nonetheless already has some familiarity with the
selection clause). The majority of the factors will       patents at issue. Where the judicial economy factor
play neutral. The relative ease of access to sources      weighs heaviest, however, is in avoiding confusion
of proof is neutral because the vast majority of          over litigating the same patent simultaneously in
the documents in the case will likely be exchanged        separate venues. Because the Court has already
electronically, making the physical location of the       recommended transferring IMT's litigation against
documents of lesser consequence. See .Symbol Techs.,      Roland to California, the Central District of California
Inc. v. Afetrologic Instruments, Inc., 450 F.Supp.2d      will have to preside over the Markman hearing and
676, 678 (E.D. Tex.2006). The inventors are scattered     issue claim constructions on the ,997 patent. If only
across the country, and will have to travel great         Roland were transferred, both the Central District of
distances regardless of whether the litigation is in      California and the Eastern District of Texas would then
California or Texas. While a number of the witnesses      be faced with the untenable prospect of infringement
are in the Central Time Zone, a number of others are      actions involving the same plaintiff litigating on the
in California or would find it easier to travel there     same patent in two separate venues. Such a situation
from Japan. No conflict of law or court congestion        would be inefficient in conserving judicial efficiency,



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                                                              to 28 U.S.C. § 1404(a) (Doc. No. 38) should
and bears potential for confusion on appeal, as it would
                                                              GRANTED pursuant to 28 U.S.C. § l404(a). Roland's
lead to competing claim constructions on the same
                                                              motion to dismiss should be DENIED.
terms in the same patent. A single judge is better
positioned to resolve the matter efficiently and in its
                                                              Within ten (10) days after receipt of the magistrate
entirety. Preserving efficiency and avoiding potential
                                                              judge's report, any party may serve and file written
confusion serves the interests and convenience of
                                                              objections to the fmdings and recommendations
the parties and the Court. Therefore, as it relates to
                                                              contained in the report. A party's failure to file
Yamaha and Open Labs, this factor weighs heavily in
                                                              written objections to the findings, conclusions and
favor of transfer. The Court recommends Yamaha and
                                                              recommendations contained in this Report within ten
Open Labs motions to transfer be GRANTED.
                                                              days after being served with a copy shall bar that
                                                              party from de novo review by the district judge of
                                                              those findings, conclusions and recommendations and,
                    CONCLUSION                                except on grounds of plain error, from appellate review
                                                              ofunobjected-to factual findings and legal conclusions
With Roland and IMT continuing litigation in the
                                                              accepted and adopted by the district court. Douglass
Central District of California on the ,997 patent,
                                                              v. United States Auto. Ass'n, 79 F.3d 1415, 1430 (5th
and the factors weighing in favor of transfer for
                                                              Cir.l996) (en bane).
all three Defendants, it is in the interests of justice
and for the convenience of the parties that all
                                                              So ORDERED and SIGNED this 7th day of
matters involving these parties be pursued in the
                                                              January, 2008.
Central District of California. Accordingly, the Court
therefore RECOMMENDS that Defendant Roland's
motion to transfer (Doc. No. 19); Defendant Yamaha            All Citations
Corporation of America's Motion to Transfer Pursuant
to 28 U.S.C. § 1404(a) (Doc. No. 25); and Defendant           Not Reported in F.Supp.2d, 2008 WL 245142
Open Labs, Inc.'s Motion to Transfer Venue Pursuant


Footnotes
1      In the California proceeding, IMT also asserted infringement of U.S. Patent No.6, 160,213 (hereinafter "the
       '2l3 patent"), but only the ,997 patent has been asserted against Roland in the present proceeding. The
       ,213 patent is being asserted against the other Defendants in this case.
2      Roland describes the extent of the California litigation as follows: "disclosures were exchanged, a protective
       order was entered and then amended, documents were requested and produced, interrogatories were
       propounded and answered, third party discover was taken, etc."Def.'s Mot. Dismiss 2 (Doc. No. 19).
3      Austin, Texas is located in the U.S. District Court for the Western District of Texas.
4      This principal is illustrated well in the court's analysis in a recent case from the Western District of Texas.
       See Paolino v. Argyll Equities. L.L.C., 2005 WL 2147931, at *4 n. 3 (W.D.Tex.2005). The Paolino court
       cited a bevy of cases from federal courts across the country which validate the Tenth Circuit's observation
       in K & v. Scientific that when venue is specified in a forum selection clause with mandatory language, the
       clause is deemed mandatory. See, e.g., Phillips v. Audio Active Ltd., 494 F.3d 378, 386--87 (2d Cir.2007)
       (recognizing that in the Second Circuit, obligatory venue language suffices to give mandatory force to a forum
       selection clause); Excel/, Inc. v. Sterling Boiler & Mech., 106 F.3d 318 (10th Cir.1997) (construing forum
       selection clause stating that "U]urisdiction shall be in the State of Colorado, and venue shall lie in the County
       of El Paso, Colorado" as mandatory); Milk 'n' Mores Inc. v. Beaver!, 963 F.2d 1342, 1346 (10th Cir.1992)
       (construing forum selection clause stating that "venue shall be proper under this agreement in Johnson
       County, Kansas" as a mandatory); Docksider, Ltd. v. Sea Tech. 875 F.2d 762, 764 (9th Cir.1989) (holding
                                                                          I


       that a clause providing that "Licensee hereby agrees and consents to the jurisdiction of the courts of the State
       of Virginia. Venue of any action brought hereunder shall be deemed to be in Gloucester County, Virginia"
       was mandatory and exclusive); Sompo Japan Ins., Inc. v. Alarm Detection Sys., Inc., 2003 WL 21877615
       (N.D.III.2003) (holding that forum selection clause providing that "venue shall be proper in Kane County,


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       Illinois should any portion of this contract have to be legally enforced" was a mandatory forum selection
      clause); Relm Wireless Cotp. v. C.P. Allstar Corp., 265 F.Supp.2d 523 (E.D.Pa.2003) (granting motion to
      dismiss based on forum selection clause providing that "[t]his Agreement shall be construed and enforced in
      accordance with the laws of the Commonwealth of Pennsylvania with venue in Chester County"); Navickas
       v. Aircenter, Inc .. 2003 WL 21212747 (E.D.Tenn.2003) (construing clause stating that the "laws of the State
      of Tennessee shall govern this contract and transaction, and the parties further agree that venue for any
      matter relating to this contract shall be in Marion County, Tennessee" was unambiguous and mandatory);
      Infinite Tech. v. Rockwell E/ec. Commerce Corp., 2001 WL 527357 (N.D.III.2001) (noting that interpreting a
      forum selection clause designating the "courts of DuPage County" to include a federal court located in Cook
      County would be a strained interpretation); N. Am. Air Force v. Rose, 2001 WL 1155078 (N.D.Cal.2001)
      (holding that forum selection clause stating that "[v]enue for any disputes between the parties will be in
       Newton County, Mississippi" clearly intended to limit venue to the state court in Newton County); Double A
      Home Care, Inc. v. Epsilon Sys., Inc., 15 F.Supp.2d 1114, 1116 (D. Kan.1998) (finding that a clause providing
      that any "action shall be venued in the County of Ramsey, State of Minnesota" was mandatory and "clearly
       require[d] venue in Minnesota state court").
           On the contrary, where jurisdiction is the sole focus of the forum selection clause, there is often an
           ambiguity unless very clear language evidencing an intent for sole jurisdiction in a particular forum is
           included.See, e.g., City of New Orleans, 376 F.3d at 504 (finding clause that states "[the parties] hereby
           consent and yield to the jurisdiction of the State Civil Courts of the Parish of New Orleans" was ambiguous,
           and therefore permissive); Southridge Ethanol, Inc. v. South La. Ethanol L.L.C., 2007 WL 2375758, at *7-
           8 (N.D.Tex.2007) (finding that clause stating "the parties hereby attorn to the jurisdiction of the Courts of
           competent jurisdiction of the State of Louisiana in any proceeding hereunder'' to be permissive since it
           does not vest exclusive jurisdiction in the courts of Louisiana); Von Graffenreid, 246 F.Supp.2d at 560-61
           (finding clause stating "that the district court of Dallas County, Texas, or ... the United States District Court
           for the Northern District of Texas, Dallas Division, shall have jurisdiction to hear and determine any claims
           or disputes ... pertaining to this Agreement" was permissive since it only specified that certain courts will
           always have jurisdiction, but evidenced no intent to exclude other jurisdictions).
           The Fifth Circuit and District Courts within the Fifth Circuit also seem to adhere to this principal, as
           discussed in the main text of the opinion.
5      IMT's most persuasive support for its position comes from a case in the United States District Court for the
       District of Columbia. See Byrd v. Admiral Moving & Storage, Inc., 355 F.Supp.2d 234, 238-39 (D.D.C.2005)
      (holding that a forum selection clause providing "venue shall lie" is permissive and ambiguous since it did not
      say venue "shall ONLY lie" in the referenced district). The precedential value of a single District of Columbia
      case is outweighed, however, by the plethora of contrary authority cited herein from the Fifth Circuit and
      District Courts within the Fifth Circuit. These cases show that the Byrd court's analysis is not the preferred
      interpretation for clauses such as the one at issue.
6     The most pertinent analysis on this issue comes from the Seventh Circuit and the Second Circuit. Both
      the Seventh Circuit and Second Circuit have each rejected, either explicitly or implicitly, the other court's
      approach to this issue.
7     IMT covenanted not to sue Roland "for infringement of any claim of the ,997 patent... based upon any
      products made, used or sold by Roland in the United states, or imported by Roland in the United States, as
      of the effective date of this Agreement."lser Decl. ~ 7. The parties "intend[ed] that th[e] covenant [not to sue]
      shall apply to the Current Products as well as any new models or new products to the extent that said new
      models or new products do not incorporate capabilities or features relating to any claim of the ,997 patent...
      beyond those capabilities and features contained in the Current Products."lser Decl. ~ 7.
8     It is worth noting that the Omron court was dealing with a clause more similar in structure and style to the
      present case than Phillips. In Omron, the clause used the phrase "disputes arising out of this agreement,"
      the same phrase used in the present forum selection clause. Meanwhile, the clause in Phillips used "any
      legal proceedings that may arise out of [the agreement]."
9     The District Courts rely on the Supreme Court's discussion in Stewart Org., Inc. v. Ricoh Corp., 487 U.S.
      22, 108 S.Ct. 2239, 101 L.Ed.2d 22 (1988), and the Fifth Circuit's analysis of the Stewart opinion in lnt'l
      Software v. Amp/icon, 77 F.3d 112, 113-14 (5th Cir.1996).




                                                                                                                               0
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                                                                                                                                   R415
Interactive Music Technology, LLC v. Roland Corp. U.S., Not Reported in F.Supp.2d ..•


10    The first question a court must address when ruling on a motion for change of venue under 28 U.S.C. § 1404
      is whether the suit could have been filed originally in the destination venue. Defendants Roland, Yamaha
      and Open Labs seek to transfer this case to the U.S. District Court for the Central District of California, and
      there is no question the case could have been filed in the Central District of California.
11    The Court is cognizant of the fact that Judge Walter may not be assigned this case upon transfer. However,
      that determination is for the Central District of California.


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Skold v. Galderma Laboratories, L.P., --- F.Supp.3d ---- (2015)
2015 WL 1740032



                  2015 WL 1740032                                 Motion granted in part and denied in part.
    Only the Westlaw citation is currently available.
             United States District Court,
                 E.D. Pennsylvania.
                                                                   West Headnotes (37)
                Thomas SKÖLD, Plaintiff,
                           v.
                                                                   [1]    Alternative Dispute Resolution
   GALDERMA LABORATORIES, L.P.; Galderma
                                                                               Compulsory mediation; mediation as
  Laboratories, Inc.; and Galderma S.A., Defendants.
                                                                          condition precedent
                Civil Action No. 14–5280.                                 Alternative dispute resolution clause in
                | Signed April 17, 2015.                                  cooperation, development, and licensing
                                                                          agreement between inventor of skin care
Synopsis                                                                  technology and corporation did not require
Background: Inventor of skin care technology brought                      inventor to refer dispute to mediation before
action against corporation, as successor-in-interest to                   bringing suit against corporation's successor-
cooperation, development, and licensing agreement, as                     in-interest for trademark infringement, false
well as related partnership and purported common parent                   advertising, unfair competition, breach of
of both corporation and partnership, alleging Lanham                      contract, and unjust enrichment under federal
Act claims for trademark infringement, false advertising,                 and Pennsylvania law, where clause contained
and unfair competition and Pennsylvania-law claims                        two clauses, one of which was mandatory,
for unfair competition, breach of contract, and unjust                    stating that parties “shall” refer matter to senior
enrichment. Defendants moved to dismiss or to stay pending                executives to attempt to negotiate resolution,
administrative proceeding.                                                and other of which was permissive, stating
                                                                          that parties “may” refer matter to nonbinding
                                                                          mediation.
Holdings: The District Court, Wendy Beetlestone, J., held                 Cases that cite this headnote
that:

[1] alternative dispute resolution clause in agreement did not     [2]    Alternative Dispute Resolution
require inventor to refer dispute to mediation;                                Compulsory mediation; mediation as
                                                                          condition precedent
[2] corporation waived any rights under agreement to have its             Alternative dispute resolution clause in
senior executives negotiate end to dispute;                               cooperation, development, and licensing
                                                                          agreement between inventor of skin care
[3] breach of contract claim against corporation was timely;              technology and corporation did not bar inventor's
                                                                          federal and Pennsylvania-law claims against
[4] parent was not liable for any breach of agreement;                    related partnership and purported common
                                                                          parent of both corporation and partnership
[5] inventor sufficiently pled unjust enrichment claims                   for trademark infringement, false advertising,
against parent and partnership ;                                          unfair competition, breach of contract, and
                                                                          unjust enrichment, where partnership and parent
[6] “gist of the action doctrine” barred certain unfair                   were not parties to agreement and no relevant
competition claims against corporation; and                               case or statute permitted non-parties to force
                                                                          signatory party to engage in negotiations
[7] forum selection clause in agreement applied to claims                 pursuant to permissive mediation clause as
against parent.                                                           condition precedent to filing suit.




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                                                                        Under the so-called “Third Circuit Rule,” if a
        Cases that cite this headnote                                   limitations bar is not apparent on the face of the
                                                                        complaint, then it may not afford the basis for a
 [3]    Alternative Dispute Resolution                                  dismissal for failure to state a claim. Fed.Rules
             Right to enforcement and defenses                          Civ.Proc.Rule 12(b)(6), 28 U.S.C.A.
        Successor-in-interest    with     respect     to                Cases that cite this headnote
        cooperation, development, and licensing
        agreement with inventor of skin care technology
        waived any rights it may have had under that              [7]   Federal Civil Procedure
        agreement to seek to have its senior executives                     Matters considered in general
        negotiate end to dispute in which inventor                      When determining whether a document is
        alleged federal and Pennsylvania-law claims                     integral to or explicitly relied upon in the
        for trademark infringement, false advertising,                  complaint, such that it may be considered on a
        unfair competition, breach of contract, and                     motion to dismiss for failure to state a claim,
        unjust enrichment, even though inventor failed                  what is critical is whether the claims in the
        to bring dispute to senior executives to try                    complaint are based on an extrinsic document
        to resolve dispute as he was required to do                     and not merely whether the extrinsic document
        under agreement's alternative dispute resolution                was explicitly cited. Fed.Rules Civ.Proc.Rule
        clause, by participating in four-year litigation                12(b)(6), 28 U.S.C.A.
        in cancellation action before Trademark Trial
        and Appeal Board (TTAB), including successful                   Cases that cite this headnote
        motion for summary judgment on inventor's
        abandonment contention.                                   [8]   Limitation of Actions
                                                                            Contracts; warranties
        Cases that cite this headnote
                                                                        Pennsylvania's four-year statute of limitations
                                                                        for skin care technology inventor's breach
 [4]    Federal Courts                                                  of contract claim against successor-in-interest
            Limitations and Laches                                      to cooperation, development, and licensing
        Absent a borrowing statute, a federal court                     agreement, as well as related partnership and
        exercising supplemental jurisdiction applies the                purported common parent of both corporation
        forum state's statute of limitations.                           and partnership, began to run when inventor
                                                                        became aware of alleged breach, which
        1 Cases that cite this headnote                                 was when partnership issued press release
                                                                        introducing United States products bearing
 [5]    Federal Civil Procedure                                         inventor's trademark but not involving inventor's
            Limitations, laches and prematurity                         technology. Fed.Rules Civ.Proc.Rule 12(b)(6),
                                                                        28 U.S.C.A.
        So-called “Third Circuit Rule,” permits a
        limitations defense to be raised by a motion to                 Cases that cite this headnote
        dismiss for failure to state a claim only if the time
        alleged in the statement of a claim shows that the
        cause of action has not been brought within the           [9]   Federal Civil Procedure
        statute of limitations. Fed.Rules Civ.Proc.Rule                     Matters considered in general
        12(b)(6), 28 U.S.C.A.                                           Court could rely on partnership's press
                                                                        release in considering motion to dismiss
        Cases that cite this headnote                                   for failure to state claim by partnership,
                                                                        related corporation, as successor-in-interest
 [6]    Federal Civil Procedure                                         to cooperation, development, and licensing
            Limitations, laches and prematurity                         agreement with inventor, and purported common



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        parent of partnership and corporation on                         insufficient under Twombly–Iqbal pleading
        inventor's breach of contract claim, even though                 standard to hold corporation liable on
        press release was not attached to complaint or                   Pennsylvania-law breach of contract claim.
        to any of parties' briefs, where it was clear
        that this claim was based on press release,                      Cases that cite this headnote
        which introduced products bearing inventor's
        trademark, which was first time that defendants           [13]   Pleading
        had used trademark in connection with United                         Disjunctive and alternative allegations
        States product that did not involve inventor's skin
                                                                         Only if there is a question as to the validity of
        care technology. Fed.Rules Civ.Proc.Rule 12(b)
                                                                         the contract in question can a plaintiff proceed
        (6), 28 U.S.C.A.
                                                                         on both breach of contract and unjust enrichment
        Cases that cite this headnote                                    theories under Pennsylvania law.

                                                                         Cases that cite this headnote
 [10]   Federal Civil Procedure
            Matters considered in general
                                                                  [14]   Implied and Constructive Contracts
        Skin care technology inventor's breach of                            Unjust enrichment
        contract claim against successor-in-interest
                                                                         Under Pennsylvania law, “unjust enrichment”
        to cooperation, development, and licensing
                                                                         is essentially an equitable doctrine under which
        agreement, as well as related partnership and
                                                                         the law implies a contract which requires the
        purported common parent of both corporation
                                                                         defendant to pay to the plaintiff the value of the
        and partnership was not based on third-party
                                                                         benefit conferred.
        document, and thus court would not consider this
        document on defendants' motion to dismiss for                    Cases that cite this headnote
        failure to state claim. Fed.Rules Civ.Proc.Rule
        12(b)(6), 28 U.S.C.A.
                                                                  [15]   Implied and Constructive Contracts
        Cases that cite this headnote                                        Unjust enrichment
                                                                         To state a claim for unjust enrichment under
                                                                         Pennsylvania law, a plaintiff must allege: (1)
 [11]   Federal Civil Procedure
                                                                         benefits conferred on one party by another; (2)
            Briefs in general
                                                                         appreciation of such benefits by the recipient;
        Federal Civil Procedure
                                                                         and (3) acceptance and retention of such benefits
            Waiver, abandonment, or default
                                                                         under such circumstances that it would be
        Where an issue of fact or law is raised in                       inequitable or unjust for the defendant to retain
        an opening brief but it is uncontested in the                    the benefit without payment of value.
        opposition brief, the issue is considered waived
        or abandoned by the non-movant in regard to the                  Cases that cite this headnote
        uncontested issue.
                                                                  [16]   Implied and Constructive Contracts
        Cases that cite this headnote
                                                                             Unjust enrichment
                                                                         Skin care technology inventor alleged
 [12]   Corporations and Business Organizations
                                                                         that he conferred benefits on partnership
            Contracts
                                                                         related to successor-in-interest to cooperation,
        Even if non-conclusory, skin care technology                     development, and licensing agreement with
        inventor's single allegation that corporation                    inventor and purported common parent of both
        was ultimate owner of successor-in-interest                      partnership and successor-in-interest, neither of
        with respect to cooperation, development,                        which were party to agreement, based on their
        and licensing agreement with inventor was                        use of inventor's trademark in marketing and


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        selling products and related goodwill and that                   on finding that defendants breached agreement
        defendants had failed to return trademark to                     by not reverting trademark to inventor when
        him in accordance with agreement or to make                      corporation voluntarily terminated it.
        payment, as required to plead Pennsylvania-
        law unjust enrichment claims against these                       Cases that cite this headnote
        defendants.
                                                                  [20]   Action
        Cases that cite this headnote
                                                                              Nature of Action
                                                                         Antitrust and Trade Regulation
 [17]   Action                                                                Representations, assertions, and
             Nature of Action                                            descriptions in general
        Under Pennsylvania law, the “gist of the action                  Under Pennsylvania law, “gist of the
        doctrine” bars plaintiffs from recovering under                  action doctrine” did not bar skin care
        tort theories for failure to perform a contract.                 technology inventor's federal and state-law
                                                                         unfair competition claims against corporation,
        1 Cases that cite this headnote
                                                                         as successor-in-interest to cooperation,
                                                                         development, and licensing agreement, as well
 [18]   Action                                                           as related partnership and purported common
             Nature of Action                                            parent of both corporation and partnership,
        Under Pennsylvania law, the “gist of the action                  insofar as inventor's claims were based on
        doctrine” bars tort claims (1) arising solely                    defendants' actions and communications after
        from a contract between the parties; (2) where                   they chose not to revert trademark to him,
        the duties allegedly breached were created and                   as required by agreement, since this alleged
        grounded in the contract itself; (3) where the                   deception by defendants breached broader
        liability stems from a contract; or (4) where                    societal duty to inventor not to mislead him,
        the tort claim essentially duplicates a breach of                which did not relate to any provision of
        contract claim or the success of which is wholly                 agreement.
        dependent on the terms of a contract.
                                                                         Cases that cite this headnote
        1 Cases that cite this headnote
                                                                  [21]   Action
 [19]   Action                                                                Nature of Action
             Nature of Action                                            Antitrust and Trade Regulation
        Antitrust and Trade Regulation                                       Passing Off or Palming Off
            Passing Off or Palming Off                                   Under Pennsylvania law, the gist of the action of
        Under Pennsylvania law, “gist of the action                      an unfair competition claim lies in the deception
        doctrine” barred skin care technology inventor's                 practiced in passing off the goods of one for
        federal and state-law unfair competition claims                  that of another, and the underlying principle
        against corporation, as successor-in-interest                    of the law of unfair competition is to prevent
        to cooperation, development, and licensing                       substitution by deception.
        agreement, as well as related partnership and
                                                                         Cases that cite this headnote
        purported common parent of both corporation
        and partnership, insofar as inventor's claims
        were based upon defendants' failure to revert             [22]   Fraud
        trademark to him, in violation of agreement,                          Effect of existence of remedy by action on
        or upon defendants' continued marketing and                      contract
        selling of products bearing trademark, since                     Under Pennsylvania law, where a purported
        success on these grounds was wholly dependent                    misrepresentation extends beyond a failure to


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        adhere to any provision of the contract, the claim                    Contacts with United States as a whole;
        sounds primarily in tort and may be maintained                   nationwide jurisdiction
        concurrently with a breach of contract action.                   Federal long-arm statute applies in a narrow band
                                                                         of cases in which the United States serves as the
        Cases that cite this headnote
                                                                         relevant forum for a minimum contacts analysis.
                                                                         Fed.Rules Civ.Proc.Rule 4(k)(2), 28 U.S.C.A.
 [23]   Federal Courts
             Contacts with United States as a whole;                     Cases that cite this headnote
        nationwide jurisdiction
        Federal long-arm statute sanctions personal               [27]   Constitutional Law
        jurisdiction over foreign defendants for claims                      Non-residents in general
        arising under federal law when the defendant has                 For a court to constitutionally exercise personal
        sufficient contacts with the nation as a whole                   jurisdiction over a foreign defendant under
        to justify the imposition of United States law,                  the federal long-arm statute: (1) there must
        but is without sufficient contacts to satisfy the                be a claim arising under federal law; (2) the
        due process concerns of the long-arm statute of                  defendant must be beyond the jurisdictional
        any particular state. U.S.C.A. Const.Amend. 5;                   reach of any state court of general jurisdiction;
        Fed.Rules Civ.Proc.Rule 4(k)(2), 28 U.S.C.A.                     and (3) the defendant must have sufficient
                                                                         contacts with the United States as a whole so
        Cases that cite this headnote
                                                                         that the court's exercise of personal jurisdiction
                                                                         over the defendant comports with the due
 [24]   Federal Courts                                                   process requirements of the Constitution or
              Related contacts and activities; specific                  other federal law. U.S.C.A. Const.Amend. 5;
        jurisdiction                                                     Fed.Rules Civ.Proc.Rule 4(k)(2), 28 U.S.C.A.
        Under the federal long-arm statute, a court may
                                                                         Cases that cite this headnote
        exercise specific personal jurisdiction over a
        defendant where the defendant has purposefully
        directed his activities at residents of the forum         [28]   Federal Courts
        and the litigation results from alleged injuries                      Related or affiliated entities; parent and
        that arise out of or related to those activities.                subsidiary
        Fed.Rules Civ.Proc.Rule 4(k)(2), 28 U.S.C.A.                     Federal Courts
                                                                              Particular Entities, Contexts, and Causes of
        Cases that cite this headnote
                                                                         Action
                                                                         Even assuming that purported parent of
 [25]   Federal Courts                                                   both partnership and related corporation
              Unrelated contacts and activities; general                 that was successor-in-interest to cooperation,
        jurisdiction                                                     development, and licensing agreement with
        Under the federal long-arm statute, the exercise                 inventor owned and operated single research
        by a court of general personal jurisdiction is                   and development facility in United States, this
        appropriate where the defendant's contacts with                  was insufficient to render parent essentially at
        the forum are so continuous and systematic as to                 home in U.S., as required for district court
        render it essentially at home in the forum state.                to exercise personal jurisdiction over parent
        Fed.Rules Civ.Proc.Rule 4(k)(2), 28 U.S.C.A.                     under federal long-arm statute in inventor's
                                                                         federal and Pennsylvania-law action alleging
        Cases that cite this headnote                                    trademark infringement, false advertising, unfair
                                                                         competition, breach of contract, and unjust
 [26]   Federal Courts                                                   enrichment. Fed.Rules Civ.Proc.Rule 4(k)(2), 28
                                                                         U.S.C.A.



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                                                                         whether the nonsignatory received a direct
        Cases that cite this headnote                                    benefit from the agreement.

                                                                         Cases that cite this headnote
 [29]   Federal Courts
             Contacts with United States as a whole;
        nationwide jurisdiction                                   [33]   Contracts
        Even a defendant's engagement in a substantial,                      Legal remedies and proceedings
        continuous, and systematic course of business                    Nonsignatory third parties that should have
        is alone insufficient to render it at home                       foreseen governance by a forum selection clause
        in a forum, as required to satisfy more                          in a contract to which they are closely related
        stringent “essentially at home” standard                         may be bound to it if it is fair and reasonable to
        for determining the applicability of general                     do so.
        jurisdiction under the federal long-arm statute.
        Fed.Rules Civ.Proc.Rule 4(k)(2), 28 U.S.C.A.                     Cases that cite this headnote

        Cases that cite this headnote
                                                                  [34]   Contracts
                                                                             Legal remedies and proceedings
 [30]   Federal Courts                                                   Forum selection clause in cooperation,
            Waiver, estoppel, and consent                                development, and licensing agreement between
        Personal jurisdiction is a waivable right, and                   corporation and inventor of skin care technology
        litigants can give express or implied consent to                 was binding upon corporation's purported parent
        the personal jurisdiction of the court through a                 as non-signatory third party, in inventor's
        variety of legal arrangements, including forum                   federal and Pennsylvania-law action alleging
        selection clauses in contracts executed by the                   trademark infringement, false advertising, unfair
        parties.                                                         competition, breach of contract, and unjust
                                                                         enrichment, where parent gained benefit from
        Cases that cite this headnote                                    use of inventor's trademark pursuant to
                                                                         agreement to market and sell products, parent
 [31]   Contracts                                                        had registered trademark in other jurisdictions
            Legal remedies and proceedings                               and sued to prevent other entities from using
                                                                         mark, and parent could have reasonably foreseen
        Nonsignatory third parties who are closely
                                                                         governance by clause.
        related to a contractual relationship are bound
        by the forum selection clauses contained in the                  Cases that cite this headnote
        agreements underlying that relationship.

        Cases that cite this headnote                             [35]   Contracts
                                                                             Legal remedies and proceedings
 [32]   Contracts                                                        Forum selection clauses are treated as ordinary
            Legal remedies and proceedings                               contract provisions and are subject to the
                                                                         ordinary rules of contract interpretation.
        In determining whether a nonsignatory third
        party is “closely related to a contractual                       Cases that cite this headnote
        relationship,” such that it may be bound by
        the forum selection clauses contained in the
        agreements underlying that relationship, the              [36]   Contracts
        court must consider several factors, including                       Existence of ambiguity
        the nonsignatory's ownership of the signatory,                   To be “unambiguous,” a contract clause must be
        the relationship between the two parties, and                    reasonably capable of only one construction.




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                                                                  Motion to Stay Pending the Outcome of the Administrative
        Cases that cite this headnote                             Proceeding, the Plaintiff's Response in Opposition thereto,
                                                                  and Galderma S.A.'s Reply. 1 The Court held oral argument
 [37]   Contracts                                                 on all pending motions on March 19, 2015.
            Legal remedies and proceedings
        Forum selection clause in cooperation,                    For the reasons that follow, the motion to stay shall be denied
        development, and licensing agreement between              as moot, the motions to dismiss for failure to state a claim
        corporation and inventor of skin care                     shall be granted in part, and the motion to dismiss for lack of
        technology applied to inventor's claims                   personal jurisdiction shall be denied.
        against corporation's purported parent, alleging
        federal and Pennsylvania-law claims for
                                                                  II. FACTUAL HISTORY AND PROCEDURAL
        trademark infringement, false advertising,
                                                                  BACKGROUND
        unfair competition, breach of contract, and
                                                                  According to the facts alleged in the Complaint, Plaintiff
        unjust enrichment, where inventor's claims
                                                                  Thomas Sköld is a citizen of Sweden. Compl. ¶ 4.
        against parent implicated agreement's terms
                                                                  Defendant Galderma S.A. (“S.A.”) is a Swiss corporation
        with respect to inventor's trademark and
                                                                  with its principal place of business in Switzerland, while
        would require consideration of agreement and
                                                                  Defendant Galderma Laboratories, Inc. (“Inc.”) is a Delaware
        parties' respective rights pursuant to agreement
                                                                  corporation with its principal place of business in Texas
        that represented only manifestation of any
                                                                  and Defendant Galderma Laboratories, L.P. (“L.P.”) is a
        relationship between inventor and parent or
                                                                  Texas limited partnership with its principal place of business
        corporation.
                                                                  in Texas. Id. ¶¶ 5–7. All three Defendant entities are
        Cases that cite this headnote                             “involved in the research, development, marketing, and sale
                                                                  of pharmaceutical and therapeutic skin care products.”Id.
                                                                  Sköld alleges that S.A. is the ultimate owner of both Inc. and
                                                                  L.P. Id. ¶ 8.
Attorneys and Law Firms
                                                                  In Summer 2001, Sköld began developing the technology
Christopher J. Michie, Bruce W. Clark, Clark Michie LLP,          that would eventually become known as “Restoraderm” and
Princeton, NJ, Michael D. Lipuma, Philadelphia, PA, for           set out to find entities interested in licensing the technology
Plaintiff.                                                        and developing the resulting product to be marketed and
                                                                  distributed for mass consumption. Id. ¶ 11. In September
Jeffrey M. Becker,Normand
                   Lisa          , Haynes & Boone LLP,            2001, Sköld met with Collagenex Pharmaceuticals, Inc.
Dallas, TX, Joseph Lawlor, Richard D. Rochford, Haynes &          (“Collagenex”) of Newtown, Pennsylvania, and presented it
Boone LLP, New York, NY, Frederick A. Tecce, Panitch,             formulations of his Restoraderm technology, using the phrase
Schwarze, Belisario And Nadel, LLP, Philadelphia, PA, for         “Restoraderm technology” both in his oral presentation
Defendants.                                                       and written materials. Id. ¶ 12. Sköld used the term
                                                                  “Restoraderm” in similar meetings he had with other
                                                                  pharmaceutical companies throughout the remainder of
                        OPINION                                   2001. Id. ¶¶ 14–18. He first manufactured a Restoraderm
                                                                  product “in its current form in about October 2001,” and
WENDY BEETLESTONE, District Judge.                                delivered samples of a material with the “Restoraderm”
                                                                  label to Collagenex in November and December 2001
I. INTRODUCTION
                                                                  and January 2002. Id. ¶¶ 19–21. Sköld and Collagenex
 *1 Before the Court are Defendants Galderma Laboratories,
                                                                  executed a Letter of Intent in December 2001 and signed
L.P. and Galderma Laboratories, Inc.'s Motion to Dismiss and
                                                                  a Cooperation, Development, and Licensing Agreement on
Motion to Stay Pending the Outcome of the Administrative
                                                                  February 11, 2002 (the “2002 Agreement”).Id. ¶¶ 22–23.
Proceeding, Plaintiff Thomas Sköld's Response in Opposition
                                                                  Under the 2002 Agreement, Sköld continued developing
thereto, and Galderma L.P. and Galderma Inc.'s Reply, as
                                                                  the Restoraderm technology, while Collagenex developed
well as Defendant Galderma S.A.'s Motion to Dismiss and


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and maintained the Restoraderm intellectual property rights,      and three counts under Pennsylvania state law—unfair
including registering and protecting the “Restoraderm”            competition, breach of contract, and unjust enrichment. Id.
trademark, a process Collagenex began in 2002. Id. ¶¶ 24–26.      ¶¶ 48–80. Sköld previously initiated a proceeding before
                                                                  the U.S. Patent and Trademark Office seeking to cancel the
 *2 In August 2004, Sköld and Collagenex signed a                 Defendants' registration of the “Restoraderm” trademark, id.
Consulting Agreement under which Sköld would provide              ¶ 37, but that proceeding has been stayed by the Trademark
“technical consulting and development services with respect       Trial and Appeal Board (“TTAB”) pending the outcome of
to Restoraderm Technology in such manner as shall be              this litigation. See infra Section IV.A.
requested by the Company from time to time,” defining
“Restoraderm Technology” as the “topical drug delivery            L.P. and Inc. filed a motion to dismiss on December 1, 2014.
technology developed by Sköld.”Id. ¶ 28. On August 19,            They contend as follows. First, the breach of contract and
2004, Sköld and Collagenex restructured the 2002 Agreement        unjust enrichment claims are barred by Pennsylvania's four-
into an Asset Purchase and Product Development Agreement          year statute of limitations because the claims began to accrue
(the “2004 Agreement”), which “formalized Sköld's control         prior to September 15, 2010. Second, the breach of contract
of the Restoraderm development.”Id. ¶¶ 27, 29. In the course      claim should also be dismissed for failing to comply with the
of negotiating this agreement, Collagenex “confirmed” that        agreement's dispute resolution and mediation clause. Third,
the Restoraderm trademark was included in the assets              the unjust enrichment claim should be dismissed because
contemplated in the agreement. Id. ¶ 30.                          the complained-of conduct is governed by contract, which
                                                                  precludes Sköld from availing himself of quasi-contract
Inc. acquired Collagenex in March 2008 and terminated             theories of recovery. And finally, the unfair competition claim
the 2004 Agreement with Sköld on November 27, 2009.               is precluded by the gist of the action doctrine because he
Id. ¶¶ 33–34. Section 8.5(b) of the 2004 Agreement                impermissibly attempts to recast a breach of contract claim as
provides that should Collagenex terminate the Agreement,          a tort claim. See L.P./Inc. Mot. to Dismiss at 8–9.
the assets, including the Restoraderm intellectual property,
and additional related records shall be transferred to Sköld.      *3 On December 22, 2014, Sköld filed his response in
Id. ¶ 35 & Ex. A at 19. Sköld alleges that the “parties'          opposition. He argues that he filed the Complaint within
contractual intent was that the Restoraderm trademark would       the four-year limitations period because he was unaware the
be returned to Sköld if the 2004 Agreement were cancelled         contract was breached until September 14, 2010, when L.P.
by Collagenex (or its successors-in-interest),” but that the      issued the press release announcing the Restoraderm product.
Defendants have yet to return the Restoraderm trademark to        In the alternative, Sköld contends he is entitled to equitable
Sköld in accordance with this provision. Id. ¶¶ 36–37.            tolling of the statute of limitations. Furthermore, he argues
                                                                  that the unjust enrichment claim is not precluded against all
After terminating the 2004 Agreement, Sköld alleges               parties by the contract and the gist of the action doctrine does
the Defendants “gave mixed messages” regarding their              not bar his unfair competition claim. See Pl.'s L.P./Inc. Opp'n
intentions for future use of the Restoraderm trademark            at 10–13. In reply, L.P. and Inc. argue that Sköld knew about
and Restoraderm technology. Id. ¶ 38. On September 14,            the Defendants' use of Restoraderm no later than August
2010, L.P. issued a Press Release announcing the launch of        16, 2010, when he initiated the TTAB proceeding, attaching
“Cetaphil® Restoraderm® products” in the United States,           a May 26, 2010 press release “demonstrating Defendant's
which, according to the Complaint, “made it clear that            widespread public use of the RESTORADERM mark for its
the Defendants intended to use the mark ‘Restoraderm’ in          products.”L.P./Inc. Reply at 2. Based on that press release,
connection with a product to be sold by them in the United        L.P. and Inc. contend that Sköld “transparent[ly] attempt[s]
States.”Id. ¶¶ 39–40. Sköld alleges that this press release       to avoid dismissal on statute of limitations grounds.”Id. They
“was the first time that the Defendants had used the term         also argue that Sköld is not entitled to equitable tolling and
‘Restoraderm’ in connection with a U.S. product that did not      reaffirm their arguments on the other grounds. See id. at 4–8.
involve Sköld's Restoraderm technology.”Id. ¶ 43.
                                                                  S.A. filed its own motion to dismiss on January 15, 2015. See
Sköld filed an action in this Court on September 15, 2014,        S.A. Mot. to Dismiss; see also supra note 1. In opposition to
alleging three counts under the Lanham Act—trademark              S.A.'s jurisdictional argument, Sköld argued that jurisdiction
infringement, false advertising, and unfair competition—          is proper under the federal long-arm statute, Federal Rule of



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Civil Procedure 4(k)(2), because S.A. has sufficient contacts       dispute in the cancellation action before the TTAB. See Pl.'s
with the United States such that the exercise of jurisdiction       L.P./Inc. Opp'n at 14–15.
comports with due process. See Pl.'s S.A. Opp'n at 9–10.
Furthermore, Sköld alleges that the forum selection clause in        *4 [1] The dispute resolution clause in the 2004 Agreement
the 2004 Agreement operates to subject S.A. to jurisdiction         contains two clauses, one of which is mandatory (the parties
in this Court. See id.In Reply, S.A. argues that: (1) Rule          shall refer the matter to senior executives to attempt to
4(k)(2) does not apply; (2) the forum selection clause does         negotiate a resolution) and the other which is permissive (the
not apply to S.A. as a non-signatory third party to the 2004        parties may refer the matter to nonbinding mediation). Given
Agreement; and (3) the forum selection clause does not apply        the voluntary nature of the latter, this Court agrees with Sköld
to the Sköld's claims against it. See S.A. Reply at 2–9.            that he was not required to refer this dispute to mediation
                                                                    before bringing suit here against Inc.

III. DISCUSSION                                                      [2] L.P. and S.A., who are not parties to the 2004
                                                                    Agreement, also contend that the dispute resolution clause
A. Motions to Stay
                                                                    requires their dismissal from this action. In essence, they
The Court first addresses the Defendants' motions to stay this
                                                                    urge this Court to accept the contention that a nonparty
action pending a decision of the TTAB in the cancellation
                                                                    to an agreement should be permitted to force a signatory
proceeding. In his Opposition to S.A.'s motion to dismiss and
                                                                    party to engage in negotiations pursuant to a permissive
motion to stay, Sköld brought to the Court's attention that the
                                                                    mediation clause in that agreement as a condition precedent
TTAB proceeding has been stayed pending the outcome of
                                                                    to filing suit but cite no relevant case or statute in support
this litigation. Pl.'s S.A. Opp'n at 11 (citing Michie Decl. ¶ 13
                                                                    of this contention. See United States v. Benish, 5 F.3d
& Ex. J). In its Reply, S.A., on behalf of all three Defendants,
                                                                    20, 26 (3d Cir.1993) (rejecting a party's claim where the
recognized this action by the TTAB and withdrew the motions
                                                                    party “provid[ed] no legal support for his argument or any
to stay. S.A. Reply at 1 n. 1. Accordingly, the Defendants'
motions to stay are moot.                                           persuasive reason” for the court to find in his favor). 2 The
                                                                    Court sees no persuasive reason to dismiss Sköld's entire
                                                                    Complaint based on this unsupported argument. Accordingly,
B. Alternative Dispute Resolution Clause                            the motion to dismiss the Complaint against L.P. and S.A. on
The Defendants contend that the Complaint should be                 this ground shall be denied.
dismissed in its entirety for failure to comply with the 2004
Agreement's dispute resolution and mediation clause. L.P./           [3] Regarding Inc.: although Sköld did fail to bring in a
Inc. Mot. to Dismiss at 12–13. The clause provides that             senior-level executive to try to resolve the dispute—as he was
“[a]ny dispute, controversy or claim arising out of or relating     required to do under the dispute resolution provision—Inc.'s
to this Agreement, or the breach, termination, or invalidity        participation in the TTAB proceedings waived any rights it
thereof shall first be referred by the parties to their senior-     may have had to seek to have the parties' executives negotiate
level executives for attempted resolution through good-faith        an end to the dispute. See, e.g., LBL Skysystems (USA),
negotiations.”Compl. Ex. A § 9.1 (emphasis added). Should           Inc. v. APG–Am., Inc., No. 02–5379, 2005 WL 2140240,
negotiations fail, thirty days after making a written request       at *30 (E.D.Pa. Aug. 31, 2005) (holding that a “party that
to initiate those negotiations, “either Party may, by written       engages in discovery and files pretrial motions waives a
notice to the other, require that the Dispute be referred to non-   contract's alternative dispute resolution provision”); Smith v.
binding mediation administered by the American Arbitration          IMG Worldwide, Inc., 360 F.Supp.2d 681, 687 (E.D.Pa.2005)
Association.”Id. (emphasis added). The Defendants assert            (finding that a party's engaging in motion practice and
that Sköld did not refer a dispute to a senior-level executive      providing “substantial discovery” constituted waiver of
for negotiations and failed to make a written request that the      contractual alternative dispute resolution provision).
dispute be referred to nonbinding mediation. L.P./Inc. Mot.
to Dismiss at 12–13. Sköld responds that the language of the        Viewing the four years' worth of docket entries in the TTAB
mediation clause is permissive (“either Party may... require”)      action, the Court considers that Inc. did not file a motion
and also argues that, in any event, Inc. has waived its right to    to stay the TTAB proceedings pending executive-level
invoke the clause because it participated in litigation over the    negotiations and instead filed, inter alia, motions to dismiss,
                                                                    a protective order, multiple summary judgment motions (one



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of which was partially granted in its favor), and a final           exercising supplemental jurisdiction applies the forum state's
brief in preparation for trial. See, e.g., Sköld v. Galderma        statute of limitations. Layser v. Morrison, 935 F.Supp. 562,
Labs., Inc., Cancellation No. 92052897, 2012 WL 5902083             570 (E.D.Pa.1995). Pennsylvania's statute of limitations to
(T.T.A.B. Nov. 8, 2012) (granting Inc.'s motion for partial         file contract actions is four years. 42 Pa. Cons.Stat. § 5525.
summary judgment on Sköld's abandonment claim).See also             In the Complaint and his Opposition, Sköld asserts that the
generally Registrant's Trial Brief, Sköld v. Galderma Labs.,        breach of contract claim accrued on Sunday, September 14,
Inc., Cancellation No. 92052897 (T.T.A.B. Aug. 13, 2014),           2010, when L.P. issued the press release announcing the
Docket No. 81. This four-year history of litigation in the          launch of “Cetaphil® Restoraderm® Products” in the United
cancellation action—from filing nearly through trial—is, on         States. See Compl. ¶ 39; Pl.'s L.P./Inc. Opp'n at 7. Because the
its face, inconsistent with the notion that Inc. was willing        Complaint was filed four years later, on Monday, September
to engage in the good-faith executive-level negotiations            15, 2014 (September 14, 2014, was a Sunday), he argues the
required by the dispute resolution provision.                       claim is timely. See1 Pa. Cons.Stat. § 1908 (“Whenever the
                                                                    last day of such period shall fall on a Saturday or Sunday ...
 *5 Moreover, the Court can look to the TTAB's grant of             such day shall be omitted from the computation.”).
partial summary judgment in favor of Inc. and dismissing
Sköld's abandonment claim as a concrete example of an               The Defendants argue that the claim for breach of contract
instance where Inc.'s conduct inconsistent with the dispute         began to accrue as early as November 27, 2009, when
resolution clause caused prejudice to Sköld, not to mention         Inc. terminated the 2004 Agreement with Sköld and did
the expenditure of time, cost, and resources attendant to           not immediately revert the Restoraderm intellectual property
maintaining a multi-year trademark cancellation action. The         to Sköld, as he alleges they were required to do. L.P./
Defendants have undisputedly accepted the judicial process          Inc. Mot. to Dismiss at 6. They further argue that Sköld's
and have demonstrated that fact by: (1) Inc.'s failure to           commencing of the TTAB proceeding on August 16, 2010,
raise the issue of good-faith negotiations promptly before          necessarily evinces his knowledge on that date that the
the TTAB; (2) Inc.'s engaging in discovery in the TTAB              Defendants had breached the contract by not reverting the
action; (3) Inc.'s filing of several pretrial motions in the TTAB   Restoraderm trademark to Sköld as provided for in the
action, none of which raise the issue of negotiation; and (4)       contract. Id. They point to an attachment to Sköld's petition
the Defendants' decision to wait until the case was ready to        in the TTAB proceeding: a May 26, 2010, article titled
proceed to trial before the TTAB and until a Complaint was          “Cetaphil RestoraDERM for extra dry skin and Eczema,”
filed in this Court before asserting Sköld's failure to negotiate   which stated that Cetaphil, an allegedly well-known Inc.
as grounds for a motion to dismiss. See St. Clair Area Sch.         brand, was planning to introduce a new line of skin care
Dist. Bd. of Educ. v. E.I. Assocs., 733 A.2d 677, 682 n. 6          products called “RestoraDERM” in August 2010. L.P./Inc.
(Pa.Commw.Ct.1999) (“The key to determining whether [an             Reply at 2 (quoting Rochford Decl. Ex. B at Ex. 8). Given
alternative dispute resolution procedure] has been waived is        Sköld's concession that the Defendants' September 14, 2010,
whether the party, by virtue of its conduct, has accepted the       press release put him on notice of the breach of contract claim,
judicial process.”). Inc. cannot now attempt to stand on the        they contend that the similarly worded May 26, 2010, article
alternative dispute resolution clause as a reason for dismissal.    should have also put him on notice. Id. at 2–3. If they are
Its right to invoke the clause has been waived.                     correct, the cause of action for breach of contract accrued no
                                                                    later than August 16, 2010, when Sköld filed his petition in
Accordingly, the motions to dismiss on this ground shall be         the TTAB proceeding attaching the article, and this lawsuit is
denied. 3                                                           untimely because it was filed over four years and three months
                                                                    later. Id.

C. Breach of Contract                                                *6 [5]        [6] Whether they are correct is determined
                                                                    by reference to the so-called “Third Circuit Rule,” which
                                                                    “permit[s] a limitations defense to be raised by a motion under
                 1. Timeliness of the Claim
                                                                    Rule 12(b)(6)‘only if the time alleged in the statement of a
 [4] The parties dispute whether Sköld's breach of contract         claim shows that the cause of action has not been brought
claim in Count Five of the Complaint is barred by the statute       within the statute of limitations.’”Schmidt v. Skolas, 770 F.3d
of limitations. Absent a borrowing statute, a federal court         241, 249 (3d Cir.2014) (quoting Robinson v. Johnson, 313



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F.3d 128, 135 (3d Cir.2002)). Under this rule “[i]f the bar is    stage. They are not integral to the complaint—the complaint
not apparent on the face of the complaint, then it may not        was not ‘based’ on” this third-party document, but rather
afford the basis for a dismissal of the complaint under Rule      on the September 14, 2010, press release published by the
12(b)(6).”Id.(quoting Robinson, 313 F.3d at 135) (internal        Defendants.Schmidt, 770 F.3d at 249–50. The Court will not
quotation marks omitted).                                         consider this document. 5

 [7] “To decide a motion to dismiss, courts generally consider     *7 Thus, taking the well-pleaded allegations in the
only the allegations contained in the complaint, exhibits         Complaint as true, and drawing all reasonable inferences
attached to the complaint and matters of public record.”Id.       in Sköld's favor therefrom, the Court will not dismiss the
(quoting Pension Benefit Guar. Corp. v. White Consol.             contract claims on statute of limitations grounds, at least at
Indus., Inc., 998 F.2d 1192, 1196 (3d Cir.1993)) (internal        this stage of the proceedings. Accordingly, the motions to
quotation marks omitted). An exception to this rule, however,     dismiss the breach of contract claim in Count Five on this
is that “a ‘document integral to or explicitly relied upon in
                                                                  ground shall be denied. 6
the complaint’ may be considered ‘without converting the
motion [to dismiss] into one for summary judgment.’”In re
Burlington Coat Factory Sec. Litig., 114 F.3d 1410, 1426 (3d
Cir.1997) (emphasis added) (alteration in original) (citation               2. Whether S.A. is a Proper Defendant
and internal quotation marks omitted). In the context of a
motion decided pursuant to the Third Circuit Rule, “what is        [11] S.A. contends that the breach of contract claim should
critical is whether the claims in the complaint are ‘based’ on    be dismissed against it because Sköld does not allege that it
an extrinsic document and not merely whether the extrinsic        was a party to the 2004 Agreement. S.A. Mot. to Dismiss
document was explicitly cited.”Schmidt, 770 F.3d at 249.         at 11; S.A. Reply at 2–3. 7 Sköld does not provide any
                                                                 counterargument in his opposition brief. “Where an issue of
 [8] [9] Here, the bar is not apparent on the face of the fact or law is raised in an opening brief but it is uncontested
Complaint. Accepting all facts alleged in the Complaint as       in the opposition brief, the issue is considered waived or
true, see Fowler v. UPMC Shadyside, 578 F.3d 203, 210–           abandoned by the non-movant in regard to the uncontested
11 (3d Cir.2009), Sköld was not aware of the Defendants'         issue.”Markert v. PNC Fin. Servs. Grp., Inc., 828 F.Supp.2d
breach until September 14, 2010, when L.P. issued the press      765, 773 (E.D.Pa.2011); see also Young v. St. Luke's Hosp.,
release introducing the products bearing the Restoraderm         No. 09–3460, 2010 WL 1348468, at *6 (E.D.Pa. Mar. 30,
            4
trademark. Sköld alleges in the Complaint that the press         2010) (“Parties who fail to adequately brief their opposition
release “was the first time that the Defendants had used the     to motions do so at the risk of having those motions granted
term ‘Restoraderm’ in connection with a U.S. product that did    as uncontested.”).
not involve Sköld's Restoraderm technology.”Compl. ¶ 42.
Although this press release was not attached to the Complaint     [12] Even so, the only allegations in the Complaint
or to any of the parties' briefs, it is clear that the breach of concerning    S.A.'s relationship with Inc., the successor-in-
contract claim is “based” on this extrinsic document, and the    interest  to the  signatory party are so sparse as to warrant
Court may thus rely on it. Schmidt, 770 F.3d at 249.             a  dismissal   of  the contract claim against S.A. Paragraph
                                                                 8 provides, “Upon information and belief, Galderma S.A.
 [10] The Defendants urge this Court to consider a document is the ultimate owner of Galderma Laboratories, Inc. and
attached to Sköld's petition initiating the proceeding before    Galderma Laboratories, L.P.” Compl. ¶ 8. And paragraph
the TTAB: a May 26, 2010, document L.P. and Inc. describe        9 states simply, that “[e]ach defendant acted in concert
as a “release,” comparing it directly to the September 14,       and active participation with each other in committing the
2010, press release Sköld alleges forms the basis for the        wrongful acts alleged herein.”Id. ¶ 9. Notwithstanding the
breach of contract action. See L.P./Inc. Reply at 3. They argue  fact that paragraph 9 is conclusory, and, without more, is
that this document, titled “Cetaphil RestoraDERM for extra       not  entitled to any credence under Twombly and Iqbal, the
dry skin and Eczema,” contains all the information Sköld         single  allegation in paragraph 8 that S.A. is the ultimate
needed to ascertain his injury and thus the claim for breach     owner of Inc. is insufficient to hold S.A. liable for a breach
of contract is untimely. Id.“While this may be true, these       of contract. See Ashcroft v. Iqbal, 556 U.S. 662, 678–79,
materials may not be considered at the motion to dismiss         129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (“Rule 8 ... does



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not unlock the doors of discovery for a plaintiff armed with       (Pa.Super.Ct.1999) (quoting Styer v. Hugo, 422 Pa.Super.
nothing more than conclusions.”); Bistrian v. Levi, 696 F.3d       262, 619 A.2d 347 (1993), aff'd,535 Pa. 610, 637 A.2d 276
352, 365 (3d Cir.2012) (stating that a court must “peel away       (1994); Schenck v. K.E. David, Ltd., 446 Pa.Super. 94, 666
those allegations that are no more than conclusions and thus       A.2d 327 (1995)). To state a claim for unjust enrichment, a
not entitled to the assumption of truth” (citation and internal    plaintiff must allege:
quotation marks omitted)). There are simply insufficient
“facts to raise a reasonable expectation that discovery will                   [1] benefits conferred on one party
reveal evidence of the necessary element[s].”Bell Atl. Corp.                   by another; [2] appreciation of such
v. Twombly, 550 U.S. 544, 556, 127 S.Ct. 1955, 167 L.Ed.2d                     benefits by the recipient; and [3]
929 (2007). Because Sköld has not addressed S.A.'s argument                    acceptance and retention of such
that it is not a party to the contract and because the Complaint               benefits under such circumstances that
does not contain sufficient allegations to survive Twombly                     it would be inequitable [or unjust] for
and Iqbal scrutiny, the breach of contract claim in Count Five                 defendant to retain the benefit without
shall be dismissed as to S.A.                                                  payment of value.

                                                                   Premier Payments, 848 F.Supp.2d at 527 (quoting Allegheny
D. Unjust Enrichment                                               Gen. Hosp. v. Philip Morris, Inc., 228 F.3d 429, 447 (3d
 *8 [13] The Defendants argue that Sköld fails to state            Cir.2000)); accord Torchia ex rel. Torchia v. Torchia, 346
a claim for unjust enrichment. They contend the claim              Pa.Super. 229, 499 A.2d 581, 582 (1985) (“To sustain a claim
should be dismissed because it is precluded by the 2004            of unjust enrichment, a claimant must show that the party
Agreement. This Court agrees that the existence of the 2004        against whom recovery is sought either wrongfully secured or
Agreement precludes Sköld from proceeding on an unjust             passively received a benefit that it would be unconscionable
enrichment claim against Inc., the successor-in-interest to        for her to retain.”).
the original Collagenex contract. See Hershey Foods Corp.
v. Ralph Chapek, Inc., 828 F.2d 989, 999 (3d Cir.1987)           [16] Sköld's allegations support a prima facie case for unjust
(stating that a claim for unjust enrichment is unavailable      enrichment. As to the first element, he alleges that he has
“when the relationship between the parties is founded on a      conferred benefits on the Defendants as a result of their
written agreement or express contract”) (citation and internal  use of the Restoraderm trademark in marketing and selling
quotation marks omitted). Sköld has not questioned the          products and the related goodwill. Compl. ¶¶ 39–41, 79. As
validity of the 2004 Agreement, and Inc. does not dispute       to the third element, he alleges that the Defendants have
its validity. Only if there were a “question as to the validity “registered the term Restoraderm as a trademark in the United
of the contract in question” could Sköld proceed on both        States and other jurisdictions” and “have failed to return
theories in the alternative against Inc. Premier Payments       the Restoraderm trademark to Sköld in accordance with the
Online, Inc. v. Payment Sys. Worldwide, 848 F.Supp.2d 513,      2004 Agreement.”Id. ¶ 37. It can also be inferred that this
527 (E.D.Pa.2012) (citation and internal quotation marks        element is satisfied because it would be inequitable or unjust
omitted). There being no such question, the motion to dismiss   for the Defendants to retain the benefit of the Restoraderm
the unjust enrichment claim against Inc. shall be granted.      trademark (which allegedly should have been returned to
                                                                Sköld upon termination of the Agreement) without payment
 [14] [15] The same is not so for S.A. or L.P. S.A. argued of value. As to the second element, although Sköld has not
throughout its briefing that it is not a party to the contract  explicitly pled that the Defendants appreciated such benefits,
and that this Court should dismiss the breach of contract       such appreciation is plausible given the Defendants' acts of
claims against it based on that fact, and the Court agreed. See marketing (and deriving profits from) products containing the
supra subsection IV.C.2. However, because the relationship      Restoraderm trademark. This same reasoning applies to L.P.,
between Sköld and S.A. is not governed by an express            as well, which is also not a party to the 2004 Agreement.
written agreement, S.A. cannot rely on the existence of the
2004 Agreement to shield it from Sköld's unjust enrichment       *9 Based on the allegations in the Complaint, Sköld has
claim. “ ‘Unjust enrichment’ is essentially an equitable        plausibly  stated a claim for unjust enrichment against S.A.
doctrine,” under which “the law implies a contract which        and  L.P.  Accordingly, the motion to dismiss the unjust
requires the defendant to pay to the plaintiff the value of the enrichment claim for failure to state a claim against S.A. and
benefit conferred.”Mitchell v. Moore, 729 A.2d 1200, 1203       L.P. shall be denied. 8


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                                                                               ordinarily have been obligated to do
                                                                               but for the existence of the contract—
E. Unfair Competition                                                          then the claim is to be viewed as one
 [17] The Defendants contend that Sköld's unfair competition                   for breach of contract. If, however, the
claim should be dismissed because of the gist of the action                    facts establish that the claim involves
doctrine, which bars plaintiffs from recovering under tort                     the defendant's violation of a broader
theories for failure to perform a contract. See L.P./Inc. Mot.                 social duty owed to all individuals,
to Dismiss at 8; see also Jones v. ABN Amro Mortg. Grp.,                       which is imposed by the law of torts
Inc., 606 F.3d 119, 123 (3d Cir.2010). 9 More specifically,                    and, hence, exists regardless of the
they argue that Sköld “attempts to recast a breach of contract                 contract, then it must be regarded as a
claim as an unfair competition tort claim.”L.P./Inc. Mot. to                   tort.
Dismiss at 8.
                                                                  Id. at 68 (citations omitted).
 [18] The doctrine “forecloses a party's pursuit of a tort
action for the mere breach of contractual duties ‘without any      [19] Under Bruno, cases where tort actions are permitted
separate or independent event giving rise to the tort.’”Brown     to arise in the context of a contractual relationship are cases
& Brown, Inc. v. Cola, 745 F.Supp.2d 588, 619 (E.D.Pa.2010)       in which the defendant's alleged acts are “not founded on
(quoting Smith v. Lincoln Benefit Co., No. 081324, 2009 WL        the breach of any of the specific executory promises which
789900, at *20 (W.D.Pa. Mar. 23, 2009), aff'd,395 Fed.Appx.       comprise the contract.”106 A.3d at 70. To the extent that
821 (3d Cir.2010)). It bars tort claims:                          Sköld bases his claim upon the Defendants' failure to revert
                                                                  the Restoraderm trademark to him, in violation of Section
            (1) arising solely from a contract                    8.5(b)(iii) of the 2004 Agreement (providing that Defendants
            between the parties; (2) where the                    “shall transfer to Sköld the Purchased Assets” upon their
            duties allegedly breached were created                voluntary termination of the Agreement), or even upon the
            and grounded in the contract itself;                  Defendants' continuing to market and sell products bearing
            (3) where the liability stems from                    the Restoraderm trademark, the claim is barred by the gist
            a contract; or (4) where the tort                     of the action doctrine. The success on these grounds of
            claim essentially duplicates a breach of              Sköld's unfair competition claim, which has been traditionally
            contract claim or the success of which                defined under Pennsylvania law as the “ ‘passing off’ a rival's
            is wholly dependent on the terms of a                 goods as one's own, creating confusion between one's own
            contract.                                             goods and the goods of one's rival,”Giordano v. Claudio,
                                                                  714 F.Supp.2d 508, 521 (E.D.Pa.2010), would be wholly
eToll, Inc. v. Elias/Savion Advertising, Inc., 811 A.2d 10, 19    dependent on this Court finding that the Defendants breached
(Pa.Super.Ct.2002) (citations omitted). The mere existence of     the 2004 Agreement by not reverting the Restoraderm
a contractual relationship between the parties, however, does     trademark to Sköld when Inc. voluntarily terminated it in
not preclude one party from bringing a tort claim against the     2009. The claim would not “lie from the breach of duties
other. See Bohler–Uddeholm Am., Inc. v. Ellwood Grp., Inc.,       imposed as a matter of social policy,” but rather from “the
247 F.3d 79, 104 (3d Cir.2001).                                   breach of duties imposed by mutual consensus.”Bohler–
                                                                  Uddeholm, 247 F.3d at 103–04 (quoting Redev. Auth. v. Int'l
In its first foray into an analysis of the gist of the action     Ins. Co., 454 Pa.Super. 374, 685 A.2d 581, 590 (1996) (en
doctrine—after a long history of predictive federal court and     banc)) (internal quotation marks omitted); see also eToll, 811
lower state court litigation on the same 10 —the Pennsylvania     A.2d at 19 (stating that the doctrine bars tort claims where the
Supreme Court, in Bruno v. Erie Insurance Co., 106 A.3d 48        “success of [the tort claim] is wholly dependent on the terms
(Pa.2014), summarized the doctrine's contours as follows:         of a contract”).

            If the facts of a particular claim                     *10 [20] [21] [22] However, to the extent that Sköld
            establish that the duty breached is one               bases his unfair competition claim on the Defendants' actions
            created by the parties by the terms of                and communications after they chose not to revert the
            their contract—i.e., a specific promise               Restoraderm trademark, the Court finds that these allegations
            to do something that a party would not                plausibly state an unfair competition claim that is not barred


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by the gist of the action doctrine. The Court recognizes the         clause, because, it argues, the breach of contract claim is
existence of some broader social duties at play in the law           time-barred 11 and because it cannot be bound by the forum
of unfair competition. The “gist of the action” of an unfair         selection clause in a contract to which it is not a party or a
competition claim “lies in the deception practiced in ‘passing       successor-in-interest to a party. Id. at 2–4. The Court will first
off’ the goods of one for that of another,” and moreover,            address the jurisdictional arguments involving the Lanham
“the ‘underlying principle of law of unfair competition is to        Act claims, followed by the arguments involving the forum
prevent substitution by deception.’”Pa. State Univ. v. Univ.         selection clause.
Orthopedics, Ltd., 706 A.2d 863, 870–71 (Pa.Super.Ct.1998)
(quoting Winthrop Chem. Co. v. Weinberg, 60 F.2d 461,
463 (3d Cir.1932)). Sköld alleges in the Complaint that,
after termination, the Defendants gave “mixed messages                                       1. Rule 4(k)(2)
concerning their intentions concerning their future use of
                                                                      *11 [23]         [24]    [25] The Due Process Clause of the
the Restoraderm trademark and the Restoraderm technology
                                                                     Fourteenth Amendment to the Constitution permits personal
developed by Sköld,” but that the September 14, 2010,
                                                                     jurisdiction so long as the nonresident defendant has certain
press release announcing the launch of the “Cetaphil®
                                                                     minimum contacts with the forum such that maintenance of
Restoraderm® products” gives rise to the inference that
                                                                     the suit does not offend “ ‘traditional notions of fair play and
the Defendants all along intended to use the Restoraderm
                                                                     substantial justice.’”Int'l Shoe Co. v. Washington, 326 U.S.
trademark on products they planned to sell. Compl. ¶¶ 38–
                                                                     310, 316, 66 S.Ct. 154, 90 L.Ed. 95 (1945) (quoting Milliken
40. Sköld has alleged that this deception on the part of
                                                                     v. Meyer, 311 U.S. 457, 463, 61 S.Ct. 339, 85 L.Ed. 278
the Defendants breaches a broader societal duty they had
                                                                     (1940)).Federal Rule of Civil Procedure 4(k)(2), colloquially
to Sköld not to mislead him, which does not relate to any
                                                                     termed the “federal long-arm statute,” “sanctions personal
provision of the contract. See Pl.'s Supp. Br. at 3. The Court
                                                                     jurisdiction over foreign defendants for claims arising under
agrees. “[W]here the purported misrepresentation extends
                                                                     federal law when the defendant has sufficient contacts with
beyond a failure to adhere to any provision of the contract,
                                                                     the nation as a whole to justify the imposition of U.S. law,
[a] claim sounds primarily in tort and may be maintained
                                                                     but is without sufficient contacts to satisfy the due process
concurrently with [a] breach of contract action.”Brown &
                                                                     concerns of the long-arm statute of any particular state.”Toys
Brown, 745 F.Supp.2d at 624. Although Sköld will likely
                                                                     “R” Us, Inc. v. Step Two, S.A., 318 F.3d 446, 455 n. 7 (3d
need to substantiate his claim further to survive summary
                                                                     Cir.2003). Under this paradigm, a court may exercise specific
judgment on this ground, the Court finds that he has alleged
                                                                     personal jurisdiction over a defendant where the defendant
sufficient facts to allow his unfair competition claim to
                                                                     has “purposefully directed his activities at residents of the
survive a motion to dismiss; it is not barred by the gist of the
                                                                     forum and the litigation results from alleged injuries that
action doctrine.
                                                                     ‘arise out of or related to’ those activities.”Burger King Corp.
                                                                     v. Rudzewicz, 471 U.S. 462, 472, 105 S.Ct. 2174, 85 L.Ed.2d
Accordingly, the motion to dismiss the unfair competition
                                                                     528 (1985). The exercise by a court of general personal
claim shall be denied.
                                                                     jurisdiction is appropriate where the defendant's contacts with
                                                                     the forum “are so ‘continuous and systematic’ as to render
F. Personal Jurisdiction Over Galderma S.A.                          [it] essentially at home in the forum State.”Daimler AG v.
Sköld contends that this Court may exercise personal                 Bauman, –––U.S. ––––, 134 S.Ct. 746, 761, 187 L.Ed.2d 624
jurisdiction over S.A. on the Lanham Act Claims pursuant to          (2014). For the purposes of a Rule 4(k)(2) general jurisdiction
the federal long-arm statute, Federal Rule of Civil Procedure        analysis, however, the relevant “forum State” is the United
4(k)(2). Pl.'s S.A. Opp'n at 9–10. Furthermore, he contends          States as a whole, rather than any individual state. See BP
that the forum selection clause in the 2004 Agreement                Chems. Ltd. v. Formosa Chem. & Fibre Corp., 229 F.3d 254
subjects S.A. to jurisdiction in this Court. Id. at 6–8. S.A.        (3d Cir.2000).
counters that it is not subject to jurisdiction under Rule 4(k)(2)
because it does not have sufficient contacts with the United          [26] [27] [28] The Rule applies “in a narrow band of
States as a whole to satisfy that Rule's requirements and            cases in which the United States serves as the relevant forum
because Sköld fails to properly allege Lanham Act claims             for a minimum contacts analysis.”Glencore Grain Rotterdam
against it. S.A. Reply at 4–9. S.A. rejects Sköld's claim that       B.V. v. Shivnath Rai Harnarain Co., 284 F.3d 1114, 1126 (9th
this Court has jurisdiction over S.A. under the forum selection


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Cir.2002). This Court can exercise jurisdiction pursuant to         “unadorned ‘continuous and systematic’ contacts standard
this rule only where:                                               for determining general jurisdiction is no longer viable” in
                                                                    this District in light of the U.S. Supreme Court's decisions
  (A) the defendant is not subject to jurisdiction in any state's   in Goodyear Dunlop Tires Operations, S.A. v. Brown, –––
    courts of general jurisdiction; and                             U.S. ––––, 131 S.Ct. 2846, 180 L.Ed.2d 796 (2011), and
                                                                    Daimler AG v. Bauman, ––– U.S. ––––, 134 S.Ct. 746, 187
  (B) exercising jurisdiction is consistent with the United
                                                                    L.Ed.2d 624 (2014), and held that those cases' more stringent
    States Constitution and laws.
                                                                    “essentially at home” standard is the operative standard for
Fed.R.Civ.P. 4(k)(2). In other words, for a Court to                determining the applicability of general jurisdiction.Farber,
constitutionally exercise personal jurisdiction over a foreign      ––– F.Supp.3d at ––––, 2015 WL 518254, at *9. “[T]he
defendant under the Rule: (1) there must be a claim arising         inquiry ... is whether corporation's ‘affiliations with the state
under federal law; (2) the defendant must be beyond the             are so “continuous and systematic” as to render [it] essentially
jurisdictional reach of any state court of general jurisdiction;    at home in the forum State.’”Daimler, 134 S.Ct. at 754
and (3) the defendant must have sufficient contacts with            (quoting Goodyear, 131 S.Ct. at 2851). Because the language
the United States as a whole so that the court's exercise of        of the Rule 4(k)(2) jurisdictional analysis previously has
personal jurisdiction over the defendant comports with the          tracked the language of the due process jurisdictional analysis
due process requirements of the Constitution or other federal       under International Shoe and its progeny, see BP Chemicals,
law. Saudi v. Acomarit Maritimes Servs., S.A., 114 Fed.Appx.        229 F.3d at 259, this Court will update accordingly the
449, 455 (3d Cir.2004). Although S.A. concedes that it is           Rule 4(k)(2) analysis to incorporate the Goodyear/Daimler
beyond the jurisdictional reach of any state court of general       standard. Cf., e.g., Archangel Diamond Corp. Liquidating
jurisdiction, seeS.A. Reply at 5 n. 2, it contends that neither     Trust v. OAO Lukoil, ––– F.Supp.3d ––––, –––– – ––––, 2014
of the other two prongs are met. First, it argues that Sköld's      WL 7232341, at *13–16 (D.Colo. Dec. 18, 2014); Toumazou
Complaint does not state a Lanham Act claim against it and          v. Turkish Republic of N. Cyprus, ––– F.Supp.3d ––––, ––––,
hence it should be dismissed. Id. at 5. Second, it argues that      2014 WL 5034621, at *6 (D.D.C. Oct. 9, 2014); Best Odds
it does not have sufficient contacts with the United States as      Corp. v. iBus Media Ltd., No. 13–2008, 2014 WL 2527145,
a whole such that the exercise of jurisdiction comports with        at *5 (D.Nev. June 4, 2014).
due process. Id. This Court agrees with the second point and,
thus, it declines to address S.A.'s argument regarding whether       [29] Goodyear and Daimler“make clear that even a
Sköld has alleged claims “arising under federal law.”               company's ‘engage [ment] in a substantial, continuous and
                                                                    systematic course of business' is alone insufficient to render
 *12 S.A. argues that Sköld has not alleged that S.A. has           it at home in a forum.”Farber, ––– F.Supp.3d at ––––,
sufficient minimum contacts with the United States as a             2015 WL 518254, at *10 (quoting Sonera Holding B.V.
whole to satisfy the Rule 4(k)(2) test. Sköld counters that         v. Çukurova Holding A.S., 750 F.3d 221, 226 (2d Cir.)
the standard to be followed in analyzing satisfaction of the        (per curiam), cert. denied, ––– U.S. ––––, 134 S.Ct. 2888,
third prong “is similar to that of personal jurisdiction for a      189 L.Ed.2d 837 (2014)). Thus, a nonresident trucking
particular state: ‘general jurisdiction is available when the       company that completed 4600 deliveries in Pennsylvania,
defendant's contacts unrelated to the litigation are continuous     earned approximately 3% of its revenue from Pennsylvania
and systematic,’ ” and proffers that S.A.'s website states that     deliveries, employed drivers who traveled hundreds of
S.A. maintains a Research and Development facility in the           thousands of miles per year in Pennsylvania, purchased tens
United States, claiming that the existence of this facility is      of thousands of gallons of gas per year in Pennsylvania,
sufficient to satisfy this prong. Pl.'s S.A. Opp'n at 10 (quoting   and made payments of over $1.7 million to Pennsylvania-
BP Chemicals, 229 F.3d at 262 (3d Cir.2000)) (internal              based carriers over the course of several years could not be
quotation marks omitted); see also Michie Decl. ¶ 8, Ex. E.         subjected to general personal jurisdiction in Pennsylvania. Id.
                                                                    at –––– – ––––, at *9–11. “Mere deliveries in Pennsylvania,
To the extent Sköld invokes the standard governing the              even occurring at regular intervals, are insufficient to justify
exercise of general personal jurisdiction over a nonresident        Pennsylvania's assertion of general jurisdiction over [a
corporate defendant, this Court very recently explained in          nonresident corporate defendant] in causes of action unrelated
Farber v. Tennant Truck Lines, Inc., –––F.Supp.3d ––––,             to those deliveries.”Id. at ––––, at *11 (citing Helicopteros
––––, 2015 WL 518254 (E.D.Pa. Feb. 9, 2015), that the



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Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 418, 104                     the exclusive jurisdiction of the state
S.Ct. 1868, 80 L.Ed.2d 404 (1984)).                                              and federal courts located in the
                                                                                 Commonwealth of Pennsylvania, and
 *13 Here, even assuming arguendo that S.A. does own                             any courts of appeal therefrom, and
and operate a single research and development facility in the                    waives any objection on the grounds of
United States, as Sköld contends (and S.A. denies, seeS.A.                       lack of jurisdiction (including, without
Reply at 8), that fact is insufficient to render S.A. “essentially               limitation, venue) to the exercise of
at home” in the United States. See BP Chemicals, 229 F.3d                        such jurisdiction over it by any such
at 258–59 (declining to find sufficient contacts where the                       courts.
defendant Taiwanese corporation exported its products to
the United States, held an ownership interest in a Delaware          Compl. Ex. A § 9.10. The Court must make two inquiries
corporation, required its personnel to travel to the United          in determining the clause's applicability to its jurisdictional
States for training); Toumazou, ––– F.Supp.3d at ––––, 2014          analysis here: first, whether the forum selection clause binds
WL 5034621, at *6 (declining to find sufficient contacts             S.A. as a non-signatory third party, and, second, whether the
where the plaintiff alleged that the defendant maintained            claims Sköld alleges against S.A. arise out of the agreement
a “West coast” and “NY” representative, participated in a            and are thus governed by its terms.
conference in the “Southern United States,” and attempted
to intervene in an Indiana litigation); Best Odds Corp., 2014
WL 2527145, at *5 (declining to find sufficient contacts,                          a. Whether the clause binds S.A.
even in light of the defendant's media kit, in which it self-
described its “significant U.S. presence”); Chavez v. Dole            [31]      [32]     [33]   Nonsignatory third parties who
Food Co., 947 F.Supp.2d 438, 443 (D.Del.2013) (finding that          are “closely related” to a contractual relationship are
a company's “ownership of a facility in Delaware, movement           bound by the forum selection clauses contained in the
of its products through Delaware, and sale of its products           agreements underlying that relationship. See, e.g., AAMCO
in Delaware” did not render the company “at home” in                 Transmissions, Inc. v. Romano, 42 F.Supp.3d 700, 708
Delaware). This Court concludes that it cannot exercise              (E.D.Pa.2014). In determining whether a nonsignatory is
personal jurisdiction over S.A. under Rule 4(k)(2).                  closely related, the Court must consider several factors,
                                                                     including the nonsignatory's ownership of the signatory,
                                                                     the relationship between the two parties, and whether the
                                                                     nonsignatory received a direct benefit from the agreement.
                 2. Forum Selection Clause
                                                                     Carlyle Inv. Mgmt. LLC v. Moonmouth Co. SA, 779 F.3d
 [30] Personal jurisdiction is, however, a waivable right,           214, 219 (3d Cir.2015). Further, third parties “that should
and litigants can give “express or implied consent to the            have foreseen governance by the clause may also be bound
personal jurisdiction of the court” through a “variety of legal      to it.”First Fin. Mgmt. Grp., Inc. v. Univ. Painters of Balt.,
arrangements,” including forum selection clauses in contracts        Inc., No. 11–5821, 2012 WL 1150131, at *3 (E.D.Pa. Apr.
executed by the parties. Ins. Corp. of Ir., Ltd. v. Compagnie        5, 2012).
des Bauxites de Guinee, 456 U.S. 694, 703, 102 S.Ct. 2099,
72 L.Ed.2d 492 (1982) (quoting Nat'l Equip. Rental, Ltd. v.           *14 The Court may apply the forum selection clause to a
Szukhent, 375 U.S. 311, 316, 84 S.Ct. 411, 11 L.Ed.2d 354            nonsignatory if the totality of the circumstances makes it fair
(1964)) (internal quotation marks omitted).                          and reasonable to bind the nonsignatory to the clause because
                                                                     it is foreseeable to the nonsignatory that it would become
And this is Sköld's final potential avenue for this Court to have    involved in the contract dispute. Lefkowitz v. McGraw–Hill
personal jurisdiction over S.A.: the forum selection clause          Cos., No. 13–1661, 2013 WL 3061549, at *3 (E.D.Pa. June
found in section 9.10 of the 2004 Agreement. The section             9, 2013);also
                                                                                see       Magi XXI, Inc. v. Stato della Citta del
reads, in relevant part:                                             Vaticano, 714 F.3d 714, 722 (2d Cir.2013) (recognizing that
                                                                     using “[a] literal approach to interpreting forum selection
             Each Party hereby submits itself for                    clauses” could undermine their purpose); Adams v. Raintree
             the purpose of this Agreement and                       Vacation Exch., 702 F.3d 436, 441 (7th Cir.2012) (reasoning
             any controversy arising hereunder to                    that “[w]ere it not for judicial willingness in appropriate



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circumstances to enforce forum selection clauses against           of the passage that undermines its position: the court in
[nonparties], such clauses often could easily be evaded”).         Mushroom Transportation stated that forum selection clauses
                                                                   are enforceable only against nonsignatories “that are closely
 [34] Sköld alleges that S.A. is the owner of Inc., the            related to the contractual relationship or that should
successor-in-interest to Collagenex (the original signatory).      have foreseen governance by the clause.”247 B.R. at 398
Compl. ¶ 8. He also alleges that S.A. has received a direct        (emphasis added) (citation and internal quotation marks
benefit from the agreement: according to the Complaint,            omitted). The Court has already found that S.A. is closely
S.A. has “taken the fruits of the Sköld–Collagenex contract        related to the contractual relationship between Sköld and Inc.
—the trademark and related goodwill associated with the            Furthermore, as the Court's discussion above makes plain,
Restoraderm® name—and used those assets in the marketing           S.A. should have foreseen governance by the clause based
and sale of its Cetaphil® products.”Pl.'s S.A. Opp'n at 8. See     on its relationship to the signatory parties and to the dispute
Synthes, Inc. v. Emerge Med., Inc., 887 F.Supp.2d 598, 607         at issue. S.A. was closely related to the Agreement through
(E.D.Pa.2012) (recognizing that a forum selection clause also      the ownership of its subsidiary Inc., it derived a direct benefit
applies to a nonsignatory third party where the third party's      from the Agreement, and it was closely related to the dispute
conduct is closely related to the contractual relationship or      through its actions involving the Restoraderm trademark pre-
the contractual dispute and where the third party enjoys           and post-termination of the Agreement. Thus, the “totality of
financial benefit from the contract). He further alleges that      the circumstances makes it fair and reasonable” to bind the
S.A. has “registered the Restoraderm® name as a trademark          nonsignatory party to the forum selection clause. Lefkowitz,
in multiple jurisdictions and has sued to prevent other entities   2013 WL 3061549, at *3. The Court therefore finds the 2004
using the domain name Restoraderm.com.” Pl.'s S.A. Opp'n           Agreement's forum selection clause binds S.A. as a non-
at 8.                                                              signatory third party.

It is certainly plausible from the totality of the circumstances    *15 This is only the first part of the analysis, however; the
alleged that S.A. was closely related to the contractual           Court yet may be unable to enforce the forum selection clause
relationship between Sköld and Inc. As a nonsignatory,             and exercise jurisdiction over S.A. if the claims Sköld alleges
it gained a benefit from the use of a trademark                    do not “arise under” the 2004 Agreement.
that was transferred to its subsidiary (as successor-in-
interest) via a contract between the plaintiff and the
subsidiary's predecessor-in-interest. Given its engagement in
                                                                                   b. Whether the clause applies
the marketing and sale of the Cetaphil/Restoraderm product,
                                                                                   to Sköld's claims against S.A.
it also should reasonably have foreseen becoming involved
in the relevant dispute over the Defendants' alleged refusal        [35] [36] Forum selection clauses are treated as ordinary
to revert the trademark back to Sköld after Inc. terminated        contract provisions and are subject to the ordinary rules of
the 2004 Agreement and after S.A. continued to register and        contract interpretation. See M/S Bremen v. Zapata Off–Shore
use the very trademark at issue in marketing and selling           Co., 407 U.S. 1, 92 S.Ct. 1907, 32 L.Ed.2d 513 (1972).
its products. Thus, the Court finds it eminently fair and          First, a court must determine whether the clause states the
reasonable that the forum selection clause binds S.A. as a         parties' intentions unambiguously. “To be ‘unambiguous,’
nonsignatory party.                                                a contract clause must be reasonably capable of only one
                                                                   construction.”Otto v. Erie Ins. Exch., 11 F.Supp.3d 482, 483
S.A. argues that the law requires the non-signatory foresee        (E.D.Pa.2014). The only reasonable construction of the clause
“being sued on the contract itself.” S.A. Reply at 4 (emphasis     in the 2004 Agreement (“Each Party hereby submits itself for
in original). In support of this argument, it includes a           the purpose of this Agreement and any controversy arising
truncated quote from Burtch v. Security Pacific Bank Oregon        hereunder to the exclusive jurisdiction of the state and federal
(In re Mushroom Transportation Co.), to the effect that            courts located in the Commonwealth of Pennsylvania ....”)
to demonstrate the “foreseeability [ ] required to enforce         is that any dispute between the parties arising under the
such a clause against a nonparty to an agreement” a                Agreement must be litigated in Pennsylvania. This clause on
plaintiff must establish that the nonsignatory “should have        its face is unambiguous. See Health Robotics, LLC v. Bennett,
foreseen governance by the clause.” 247 B.R. 395, 398              No. 09–0627, 2009 WL 1708067, at *3 (E.D.Pa. June 16,
(E.D.Pa.2000) (emphasis in original). S.A. omits the portion       2009). Having so found, this Court must now determine



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whether Sköld's claims “arise out of the Agreement” and are        In Omron Healthcare, Inc. v. Maclaren Exports Ltd., 28 F.3d
thus covered by the terms of the forum selection clause. Id.;      600 (7th Cir.1994), the Seventh Circuit expressed its broad
see also Terra Int'l, Inc. v. Miss. Chem. Corp., 119 F.3d 688,     view on the applicability of forum selection clauses to claims,
692 (8th Cir.1997) (stating that before a court can consider       holding that “all disputes the resolution of which arguably
enforcing a forum selection clause, “it must first decide          depend on the construction of an agreement ‘arise out of’
whether the clause applies to the type of claims asserted in       that agreement” for purposes of enforcing such clauses. Id.
the lawsuit”). 12                                                  at 603. In Laserdynamics, Inc. v. Acer America Corp., 209
                                                                   F.R.D. 388 (S.D.Tex.2002), the Southern District of Texas
The Third Circuit's decision in Crescent International v.          held that important to the forum selection clause analysis was
Avatar Communities, Inc., 857 F.2d 943 (3d Cir.1988)               a determination of the “spirit” of the underlying agreement,
(per curiam), is instructive on this question. The issue in        as well as the subject matter comprising the agreement's
Crescent involved interpretation of a forum selection clause       “nucleus.” Id. at 391. And finally, the Southern District of
in an agreement between Crescent, a Pennsylvania-based             New York, in finding that a plaintiff's action “clear[ly]” arose
corporation, and Avatar, a Florida-based corporation, under        pursuant to the contract and enforcing a forum selection
which Crescent sold real estate owned by Avatar in return          clause, looked to the fact that the plaintiff's “entire business
for commissions. The agreement chose Florida law and               relation with the defendant ... stemmed from the contract,”
provided that “any litigation upon any of [its] terms ... shall    and, as a result “[a]ny determination with respect to plaintiff's
be maintained” in a state or federal court in Miami, Florida.      claims will require consideration of the contract and of the
Id. at 944. Crescent, however, filed an action in the Eastern      parties' respective rights pursuant to the contract.”YWCA v.
District of Pennsylvania alleging breach of contract and           HMC Entm't, Inc., No. 91–7943, 1992 WL 279361, at *4
several related, albeit noncontractual, claims. Avatar moved       (S.D.N.Y. Sept. 25, 1992).
to dismiss, arguing that the forum selection clause applied to
noncontractual as well as contractual claims and, as such, the      [37] Taking into account the above analysis, the Court
action was in the wrong forum. The district court agreed and       finds that the forum selection clause in the 2004 Agreement
dismissed the suit.                                                applies to Sköld's claims against S.A. Those claims arise
                                                                   out of the 2004 Agreement and implicate its terms. See
Crescent argued on appeal that the forum selection clause          Crescent, 857 F.2d at 945. In fact, Sköld's “entire business
was narrowly drafted and could not apply to noncontractual         relation” with the Galderma entities with respect to the
claims. The Third Circuit, however, determined that the            Restoraderm trademark stems from the 2004 Agreement.
pleading of alternate noncontractual theories does not alone       YWCA, 1992 WL 279361, at *4. Thus, determination of
allow a party to avoid enforcement of a forum selection            Sköld's claims implicate the contract's terms and will require
clause “if the claims asserted arise out of the contractual        consideration of the contract and the parties' respective rights
relation and implicate the contract's terms.”Id. at 945. The       pursuant to the contract. See id.The 2004 Agreement is not
court held that the district court correctly construed the         “merely one of the final manifestations” of the “ongoing
forum selection clause, concluding that “[a]lthough only           business relationships between the parties”—a situation in
one of Crescent's claims is based on a breach of contract          which forum selection clauses have been held inapplicable to
theory, all of them involve allegations arising out of the         noncontractual claims.Gen. Envtl. Sci. Corp. v. Horsfall, 753
agreement implicating its terms.”Id.; see also Coastal Steel       F.Supp. 664, 667–68 (N.D.Ohio 1990). Quite the contrary,
Corp. v. Tilghman Wheelabrator Ltd., 709 F.2d 190, 203             the 2004 Agreement was the final manifestation of the
(3d Cir.1983) (“[W]here the relationship between the parties       relationship between Sköld and Collagenex and the only
is contractual, the pleading of alternative non-contractual        manifestation of a relationship between Sköld and any
theories of liability should not prevent enforcement of such a     Galderma entity.
bargain.”), overruled on other grounds by Lauro Lines s.r.l.
v. Chasser, 490 U.S. 495, 109 S.Ct. 1976, 104 L.Ed.2d 548          The “nucleus” of the 2004 Agreement is the transfer
(1989).                                                            of the Restoraderm trademark, and the “spirit of the ...
                                                                   agreement contemplate[d] the rights and duties of the parties”
 *16 Several decisions involving similarly worded forum            concerning the Restoraderm trademark. Laserdynamics, 209
selection clauses in similar factual scenarios from courts in      F.R.D. at 389. Accordingly, if any of the rights or obligations
other jurisdictions are also helpful in resolving this question.   in the 2004 Agreement were “threatened or impaired by



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an act of the parties or their privities, that act gives rise         Reply [ECF No. 33]; Defendant Galderma S.A.'s Motion
to a dispute under the agreement.”Id. Sköld's allegations             to Dismiss and Motion to Stay Pending the Outcome of
that the acts of the Defendants, in declining to revert the           the Administrative Proceeding [ECF No. 36], the Plaintiff's
                                                                      Response in Opposition thereto [ECF No. 38], and Galderma
Restoraderm intellectual property to him upon termination
                                                                      S.A.'s Reply [ECF No. 46]; the parties' supplemental briefing
of the 2004 Agreement and continuing to market and sell
                                                                      on the Plaintiff's unfair competition claim [ECF Nos. 54 &
products bearing the Restoraderm mark, are the nucleus of his
                                                                      55]; and oral argument on March 19, 2015, and for the reasons
claims that his rights under the 2004 Agreement have been
                                                                      provided in the Court's revised opinion of April 17, 2015
impaired. S.A. should be expected to answer to those claims.
                                                                      [ECF No. 56], IT IS ORDERED that:
 *17 At bottom, because “all disputes the resolution of which           (1) Defendant Galderma S.A.'s motion to dismiss the
arguably depend on the construction of an agreement ‘arise                breach of contract claim in Count Five is GRANTED;
out of’ that agreement” for purposes of enforcing a forum                 Count Five of the Complaint shall be DISMISSED
selection clause, Omron, 28 F.3d at 603, the Court holds                  WITH PREJUDICE as to Defendant Galderma S.A.;
that S.A. cannot avoid enforcement of the forum selection
clause because the non-contractual claims asserted “arise               (2) Defendants' Galderma Laboratories, Inc.'s motion to
out of the contractual relation and implicate the contract's               dismiss the unjust enrichment claim in Count Six is
terms.”Crescent, 857 F.2d at 945. When the substance of the                GRANTED; Count Six of the Complaint shall be
plaintiff's claims, stripped of their labels, fall within the scope        DISMISSED WITH PREJUDICE as to Defendant
of the forum selection clause, the opposing party cannot avoid             Galderma Laboratories, Inc.;
it. The dispute between Sköld and S.A. arises out of the 2004
Agreement such that the forum selection clause is applicable            (3) Defendants' motions to dismiss the unfair competition
against S.A. on all claims Sköld has alleged.                              claim in Court Four are GRANTED IN PART; to the
                                                                           extent the Plaintiff bases his unfair competition claim on
The exercise of personal jurisdiction over S.A. is                         the Defendants' alleged failure to revert the trademark
                                                                           to him based on the terms of the parties' agreement, the
proper. 13 The motion to dismiss for lack of personal
                                                                           claim is DISMISSED WITH PREJUDICE as to all
jurisdiction shall be denied.
                                                                           Defendants on those grounds; the motions to dismiss this
                                                                           claim are otherwise DENIED;
An appropriate Order follows.
                                                                        (4) Defendants' motions to dismiss for failure to state a
                                                                           claim are otherwise DENIED;
Dated: March 20, 2015.
                                                                        (5) Defendants' motions to stay are DENIED AS MOOT;
                      REVISED ORDER                                        and

AND NOW, this 17th day of April, 2015, upon consideration               (6) Defendant Galderma S.A.'s motion to dismiss for lack
of Defendants Galderma Laboratories, L.P. and Galderma                     of personal jurisdiction is DENIED.
Laboratories, Inc.'s Motion to Dismiss and Motion to Stay
Pending the Outcome of the Administrative Proceeding [ECF
                                                                      All Citations
No. 22], Plaintiff Thomas Sköld's Response in Opposition
thereto [ECF No. 29], and Galderma L.P. and Galderma Inc.'s           --- F.Supp.3d ----, 2015 WL 1740032


Footnotes
1       Galderma S.A. was served after Galderma Laboratories, L.P. and Galderma Laboratories, Inc. had filed their motion to
        dismiss. Galderma S.A. then filed its own motion to dismiss, incorporating the arguments contained in L.P. and Inc.'s
        motion to dismiss Sköld's state-law claims and also arguing separately that this Court cannot exercise either general
        or specific personal jurisdiction over it. See S.A. Mot. to Dismiss at 11. Hereinafter, any reference in this Opinion to
        an argument made by “the Defendants” collectively will be used in the context of an argument asserted by Galderma




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2015 WL 1740032

       Laboratories, L.P. and Galderma Laboratories, Inc. in their Motion to Dismiss that was later incorporated by Galderma
       S.A. in its Motion to Dismiss.
2      Both cases the Defendants cite ostensibly in support of their argument are inapposite, as both involved parties to an
       agreement forcing other parties to that agreement to engage in the binding arbitration to which they assented at the time
       of contracting. See Seus v. John Nuveen & Co., 146 F.3d 175, 177 (3d Cir.1998) (“I agree to arbitrate any dispute, claim
       or controversy that may arise between me and my firm ....”), overruled on other grounds byGreen Tree Fin. Corp.-Ala.
       v. Randolph, 531 U.S. 79, 121 S.Ct. 513, 148 L.Ed.2d 373 (2000); Halide Grp., Inc. v. Hyosung Corp., No. 10–2392,
       2010 WL 4456928, at *2 (E.D.Pa. Nov. 8, 2010) (stating that the relevant agreement provided any dispute or claim that
       could not be settled by mandatory “best efforts” negotiation “shall be finally resolved by arbitration in the defendant's
       country” (emphasis added)).
3      As an alternative to dismissal, the Defendants request that the Court stay this action and order that Sköld take the steps
       outlined in the dispute resolution clause before proceeding here. L.P./Inc. Mot. to Dismiss at 13 n. 5. In support of this
       argument, they cite Mendez v. Puerto Rican International Cos., 553 F.3d 709 (3d Cir.2009), in which the Third Circuit
       affirmed the district court's grant of a stay pending arbitration. While it is true that Section 3 of the Arbitration Act permits
       a district court to stay “any suit ... brought in any of the courts of the United States upon any issue referable to arbitration,”
       9 U.S.C. § 3 (2012) (emphasis added), and while it is true that this section is drafted broadly enough “to permit the
       stay of litigation between nonarbitrating parties as long as that lawsuit is based on issues referable to arbitration under”
       an agreement governed by the Arbitration Act, Contracting Nw., Inc. v. City of Fredericksburg, 713 F.2d 382, 387 (8th
       Cir.1983), the Defendants have not provided any support for the argument that these principles apply to nonparties
       seeking stays pending the outcome of good-faith negotiations.
            “The power to stay proceedings,” and, as a corollary, the power to decline to stay proceedings, “is incidental to the
            power inherent in every court to control the disposition of the causes on its docket with economy of time and effort
            for itself, for counsel, and for litigants.”Landis v. N. Am. Co., 299 U.S. 248, 57 S.Ct. 163, 81 L.Ed. 153 (1936). The
            2004 Agreement was allegedly breached in 2010, and Sköld has already been involved in four years of litigation
            with one Defendant in the TTAB action since then (which, as stated above, has already been stayed). Moreover, all
            parties in the present action have been involved in this litigation for over half a year. If the parties have been unable
            to reach some common ground through all that time, the Court finds it unlikely that imposing a stay to force good-
            faith negotiations and perhaps a separate mediation will be anything but a waste of the parties' (and the Court's)
            time, energy, and resources. For these reasons, the Court will not stay this action to impose the 2004 Agreement's
            alternative dispute resolution clause.
4      The Court finds no merit in the Defendants' argument that the breach accrued on the day Inc. terminated the 2004
       Agreement. Section 8.2 of the Agreement expressly provided that Collagenex could terminate at any time after March 31,
       2007. See Compl. Ex. A. Construing all reasonable inferences in the Plaintiff's favor, the Agreement was unclear by what
       date Inc. was required to transfer assets to Sköld after electing to terminate the Agreement. Any arguments to the contrary
       involve fact-specific issues of contract interpretation not appropriate for determination at this stage of the proceedings.
5      The Defendants also urged the Court at oral argument to consider the fact of the Plaintiff's filing of the TTAB petition
       as evidence that he was aware the contract was breached prior to September 14, 2010. While the Complaint mentions
       that there was a TTAB proceeding pending at the time of filing, see Compl. ¶ 37, the date of filing is not included and
       thus the Court need not consider it in ruling on whether to grant a motion to dismiss the breach of contract claim on
       timeliness grounds, which, again, is only permissible “[i]f the bar is ... apparent on the face of the complaint.”Schmidt,
       770 F.3d at 249.
6      As the Court has denied the Defendants' motion to dismiss on timeliness on the face of the Complaint, it declines to
       address Sköld's equitable tolling argument.
7      S.A. argues (but only in passing) in its Reply that L.P. likewise is not a party to the contract and should likewise not be
       called to defend against the breach claims. S.A. Reply at 2. This is not an argument that was raised by L.P. in its briefing,
       however, and the Court thus declines to address such an argument now. See Carpenter v. Vaughn, 888 F.Supp. 635,
       648 (M.D.Pa.1994) (“A litigant who fails to press a point by supporting it with pertinent authority or by showing why it is
       a good point despite a lack of authority ... forfeits the point.”).
8      The Defendants also argue that the unjust enrichment claim is untimely because the Complaint was filed beyond the
       four-year statute of limitations. L.P./Inc. Mot. to Dismiss at 6–8. Sköld repeats the arguments he raised in the breach of
       contract context. Pl.'s L.P./Inc. Opp'n at 10–12. The Court finds, for the purposes of this motion to dismiss, that the unjust
       enrichment claim similarly is not barred by the statute of limitations.




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9      At the Preliminary Pretrial Conference held on March 17, 2015, the Court ordered the parties to submit supplemental
       briefing on Sköld's unfair competition claim in light of the Pennsylvania Supreme Court's recent decision in Bruno. See
       ECF No. 48. That briefing having been provided, the Court will now rule on this claim.
10     See, e.g., Williams v. Hilton Group PLC, 93 Fed.Appx. 384, 385 (3d Cir.2004); Vives v. Rodriguez, 849 F.Supp.2d 507,
       516 (E.D.Pa.2012); PPG Indus., Inc. v. Generon IGS, Inc., 760 F.Supp.2d 520, 527 n. 1 (W.D.Pa.2011); Sunburst Paper,
       LLC v. Keating Fibre Int'l, No. 06–3957, 2006 WL 3097771, at *2 n. 2 (E.D.Pa. Oct. 30, 2006); Caudill Seed & Warehouse
       Co. v. Prophet 21, Inc., 123 F.Supp.2d 826, 833–34 (E.D.Pa.2000).
11     The Court has already addressed the merits of the statute of limitations argument and denied the Defendants' motion to
       dismiss on that ground. See supra subsection IV.C.1. It will not reiterate the discussion here.
12     At the outset, the Court recognizes the restrictive “arising under” language present in the 2004 Agreement's forum
       selection clause. Several courts have held that the term “relating to” in a clause casts a wider net than the term “arising
       out of” or “arising under,” and thus drawing analogies to other cases “is useful only to the extent those other cases
       address contact language that is the same or substantially similar.”John Wyeth & Bro. Ltd. v. CIGNA Int'l Corp., 119 F.3d
       1070, 1075 (3d Cir.1997) (Alito, J.); see also id. at 1074–75 (interpreting the term “arising in relation to” to mean that
       the dispute has some “logical or causal connection to the contract”); Vt. Pure Holdings Ltd. v. Descartes Sys. Grp., Inc.,
       140 F.Supp.2d 331, 335 (D.Vt.2001) (“[T]he term ‘relating to’ has a much broader meaning than ‘arising out of.’ ”). As
       a result, the analogous cases cited by the Court in this Section all involve forum selection clauses containing “arising
       out of” language.
13     In its Reply brief and at oral argument, S.A. advanced the argument that “even if the 2004 Agreement's forum selection
       clause were somehow to apply to Galderma S.A., Sköld ignores that he still needs to meet the constitutional minimum
       contacts test....” S.A. Reply at 4. This argument is meritless. The forum selection clause is one of the “variety of legal
       arrangements” through which parties impliedly consent to the personal jurisdiction of a particular court. See Insurance
       Corp. of Ireland, 456 U.S. at 703, 102 S.Ct. 2099. Mandating that a plaintiff meet the constitutional minimum contacts test
       for personal jurisdiction as a prerequisite to enforcement of a forum selection clause would utterly defeat the purpose of
       forum selection clauses. Indeed, “Pennsylvania law provides that were a party has consented to personal jurisdiction via
       a contractual provision, the minimum contacts due process analysis usually employed to analyze jurisdiction on a Rule
       12(b)(2) motion to dismiss is not appropriate.”Synthes, 887 F.Supp.2d at 606 n. 4 (internal punctuation omitted).


End of Document                                               © 2015 Thomson Reuters. No claim to original U.S. Government Works.




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                                                           [4] injunction was properly granted against limited
                                                           partnership created by investor to purchase and hold
               2015 WL 3451675
                                                           investment; and
 Only the Westlaw citation is currently available.
           Court of Appeals of Texas,
                                                           [5] award of attorney fees in favor of business was
                     Dallas.
                                                           proper.
           Jeffrey Leibovitz and Sequoia
      Frankford Springs 23, L.P ., Appellants
                                                           Affirmed.
                           v.
  Sequoia Real Estate Holdings, L.P ., Appellee

             No. 05-14-00125-CV                             \Vest Headnotes (38)
             Opinion Filed May 29, 2015

Synopsis                                                    Ill    Contracts
Background: Following parties' settlement of                        ~ Reliance on representation

underlying lawsuits stemming from investment                       Reliance by the party asserting fraud is
offering concerning apartment complex, business that               element of breach of contract defenses
created investment offering sued investor, who had                 of fraudulent inducement, fraudulent
invested tax-deferred money in complex as tenant in                concealment, and fraud by nondisclosure.
common pursuant to business's investment offering,
for breach of contract and seeking injunction barring              1 Cases that cite this headnote
investor from filing complaint against investor with
Financial Industry Regulatory Authority (FINRA) and         (2)    Contracts
the Securities and Exchange Commission (SEC) and                       Fraud and Misrepresentation
from communicating with other investors regarding
                                                                   In general, contract is subject to avoidance
complaint. Investor filed affirmative defenses to
                                                                   on ground of fraudulent inducement;
business's claims. The 116th Judicial District Court,
                                                                   however, in some situations, parties can
Dallas County, Tonya Parker, J., granted injunction,
                                                                   agree in contract to waive right to assert
granted business summary judgment on investor's
                                                                   fraud as a defense to breach of the contract
affirmative defenses, and awarded business damages
                                                                   by expressly disclaiming reliance.
and attorney fees. Investor appealed.
                                                                   I Cases that cite this headnote


Holdings: The Court of Appeals, Myers, J., held that:       [3]    Contracts
                                                                       Fraud and Misrepresentation
[ 1] investor waived reliance in settlement agreement,
                                                                  Factors most relevant to whether there
precluding affirmative defense of fraud;
                                                                  was a waiver of reliance precluding
                                                                  affirmative defense of fraud to breach
[2] enforcement of confidentiality provision of
                                                                  of contract claim are whether: (1)
settlement agreement would not have made investor
                                                                  terms of contract were negotiated, rather
guilty of misprision of felony;
                                                                  than boilerplate, and during negotiations
                                                                  parties specifically discussed issue which
[3] as a matter of apparent first impression, investor's
                                                                  has become topic of subsequent dispute;
statement in agreement that he signed agreement
                                                                  (2) complaining party was represented by
without any duress was enforceable, precluding
                                                                  counsel; (3) parties dealt with each other
economic duress defense.
                                                                  in an arm's length transaction; (4) parties
                                                                  were knowledgeable in business matters;




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        and (5) release and non-reliance language                common pursuant to investment offering,
        was clear.                                               was represented by counsel during
                                                                 settlement negotiations of prior actions
        2 Cases that cite this headnote                          arising out of investment offering, as
                                                                 factor weighing in favor of determination
 [41    Compromise ami Settlement                                that waiver-of-reliance provision of
             Fraud or duress                                     settlement agreement precluded investor's
                                                                 affirmative defense of fraud to subsequent
        Fact that an agreement is a once
                                                                 breach of contract claim asserted
        and for all settlement constitutes factor
                                                                 by business that created investment
        for rejecting fraud-based affirmative
                                                                 opportunity, stemming from investor's
        defenses to breach of contract claims.
                                                                 statement that he would file complaints
        Cases that cite this headnote                            against business if investor was not
                                                                 reimbursed by business for alleged
                                                                 losses he suffered through investment;
 [5]    Compromise and Settlement
                                                                 even if investor signed agreement
             Fraud or duress
                                                                 without consulting attorney, agreement
        Investor and business that created                       stated that investor had opportunity to
        investment offering specifically discussed               review agreement with independent legal
        issue that became topic of subsequent                    counsel, and attorney had access to
        dispute in business's breach of contract                 attorneys at time agreement was signed.
        action against investor during parties'
        prior settlement negotiations pertaining                 Cases that cite this headnote
        to underlying actions arising out of
        investment offering, as factor used
                                                          [7]    Compromise and Settlement
        to determine whether investor waived
                                                                      Fraud or duress
        reliance, as element of fraud, in settlement
                                                                 Settlement agreement pertaining to
        agreement, thereby precluding investor's
                                                                 parties' prior actions involving investment
        affirmative defense of fraud to breach of
                                                                 offering concerning apartment complex
        contract claim; parties disclaimed reliance
                                                                 was      an     arm's-length     transaction,
        with respect to all decisions being made
                                                                 as factor weighing in favor of
        during settlement negotiations, including
                                                                 determination that waiver-of-reliance
        decisions that parties released one another
                                                                 provision of agreement precluded
        from any and all presently existing
                                                                 investor's affirmative defense of fraud
        claims relating to dispute, investment
                                                                 to subsequent breach of contract claim
        offering, or any other matter, and even
                                                                 asserted by business that created
        if it were required that parties had
                                                                 investment opportunity; there were
        to have discussed facts of subsequent
                                                                 attorneys on all sides at time of agreement,
        lawsuit, facts discussed by parties during
                                                                 and there were negotiations leading to
        negotiation of settlement agreement were
                                                                 agreement.
        closely related to facts alleged in breach
        of contract suit.                                        Cases that cite this headnote

        l Cases that cite this headnote
                                                          (8)    Compromise and Settlement
                                                                      Fraud or duress
 [6]    Compromise and Settlement
             Fraud or duress                                     Parties to settlement agreement pertaining
                                                                 to prior actions involving investment
        Investor, who invested tax-deferred
                                                                 offering concerning apartment complex
        money in apartment complex as tenant in



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        were knowledgeable in business matters,
        as factor weighing in favor of                            1 Cases that cite this headnote
        determination that waiver-of-reliance
        provision of agreement precluded                  [1 0]   Compromise and Settlement
        investor's affirmative defense of fraud                    P Fraud or duress
        to subsequent breach of contract claim
                                                                  Release
        asserted by business that created
                                                                      Fraud and l'vlisrepresentation
        investment opportunity; agreement stated
                                                                  Parties' settlement agreement pertaining
        parties were sophisticated, in order to
                                                                  to prior actions involving investment
        invest in offering, investor was required
                                                                  offering concerning apartment complex
        to be an accredited investor, and prior
                                                                  was once and for all settlement, as factor
        to investing in offering, investor was
                                                                  weighing in favor of rejecting fraud-based
        required to state in writing that he
                                                                  affirmative defenses asserted by investor
        had such knowledge and experience in
                                                                  to breach of contract claims filed by
        financial and business matters that he was
                                                                  business that created investment offering;
        capable of evaluating merits and risks of
                                                                  agreement stated that it was intended to
        investment and had ability to protect his
                                                                  extinguish, without limitation, any and all
        own interests concerning investment. 17
                                                                  claims that parties did not know or suspect
        C.F.R. § 230.2l5(e), (f), (h).
                                                                  to exist at time agreement was executed,
        Cases that cite this headnote                             that it was express intention of parties that
                                                                  releases would be construed as broadly as
                                                                  possible, and that parties did not intend to
 191    Compromise and Settlement
                                                                  except any entity or claim from releases,
           Fraud or duress
                                                                  except breaches of agreement.
        Release
            .Fraud and Misrepresentation                          Cases that cite this headnote
        Language of release and disclaimer
        of reliance contained in parties                  (11]    Compromise and Settlement
        settlement agreement pertaining to prior                   ~ Construction of Agreement
        actions involving investment offering
                                                                  Obstructing Justice
        concerning apartment complex was
                                                                      Misprision of a Felony
        clear, as factor weighing in favor
                                                                  Enforcement of confidentiality provision
        of determination that disclaimer-of-
                                                                  of settlement agreement between investor
        reliance provision of agreement precluded
                                                                  in apartment complex and business that
        investor's affirmative defense of fraud
                                                                  created investment offering concerning
        to subsequent breach of contract claim
                                                                  complex, pertaining to underlying
        asserted by business that created
                                                                  lawsuits stemming from investment
        investment opportunity; parties did not
                                                                  offering, would not have prevented
        rely on any representation by any other
                                                                  investor from reporting business's
        party when they gave up any rights they
                                                                  felonious actives, such that enforcement
        might have had regarding complaint about
                                                                  of confidentiality provision would not
        another party that existed on effective
                                                                  have made investor guilty of misprision
        date of agreement, regardless of whether
                                                                  of felony; to extent confidentiality
        complaining party knew of complaint's
                                                                  provision prohibited party from reporting
        existence, and concerning any matter
                                                                  another party's illegal activities, those
        whatsoever, from beginning of time to
                                                                  prohibitions were nullified by statement
        present.
                                                                  that agreement did not prohibit party from




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        disclosing information as required by law.               no legal right to do; (2) some illegal
        18 U.S.C.A. § 4.                                         exaction or some fraud or deception; and
                                                                 (3) restraint is imminent and such as
        Cases that cite this headnote                            to destroy free agency without present
                                                                 means of protection.
 [12)   Obstructing Justice
                                                                 Cases that cite this headnote
             Misprision of a Felony
        Misprision of felony has four elements:
        (1) felony was committed; (2) accused             (17]   Contracts
        had knowledge of felony; (3) accused                              Questions for jury
        failed to notify authorities; and (4)                    Whether the conduct or acts of party
        accused took an affirmative step to                      accused constitute economic duress, as
        conceal crime. 18 U.S.C.A. § 4.                          defense to contract enforcement, is a
                                                                 question of law, but whether duress
        Cases that cite this headnote                            exists in a particular situation is a
                                                                 question of fact dependent upon the
 [13)   Contracts                                                circumstances surrounding the situation,
             Effect ofillegality                                 including mental effect on party claiming
                                                                 duress.
        Contract to do a thing which cannot be
        performed without violation of law is                     Cases that cite this headnote
        void.

        Cases that cite this headnote                     [18]   Compromise and Settlement
                                                                   ~   Fraud or duress

 [14]   Contracts                                                Investor's statement in prior settlement
             Effect of Illegality                                agreement with business that created
                                                                 investment offering that investor signed
        When illegality does not appear on the
                                                                 agreement voluntarily and without
        face of the contract, it will not be held
                                                                 any     duress     or undue       influence
        illegal and thus void unless facts showing
                                                                 was enforceable, precluding investor's
        its illegality are before the court.
                                                                 economic duress defense to enforceability
        Cases that cite this headnote                            of agreement in subsequent action
                                                                 brought by business for breach of
                                                                 settlement agreement; agreement was
 [15]   Contracts
                                                                 negotiated at arm's length by sophisticated
         ~Duress
                                                                 parties that were represented by counsel
        Economic duress       is        defense   to             or had opportunity and means to obtain
        enforcement of contract.                                 representation, disclaimer of duress was
                                                                 clear, and parties intended for agreement
        Cases that cite this headnote
                                                                 to create end to all disputes between them.

 (16]   Contracts                                                Cases that cite this headnote
             Duress
        Contracts                                         [19]   Injunction
             Threats in general                                        Grounds in general: multiple factors
        Elements of economic duress, as defense                  To be entitled to permanent injunction,
        to enforce contract, are: (1) threat to                  plaintiff must plead and prove: (1)
        do something that threatening party has                  wrongful act; (2) imminent harm; (3)




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        irreparable injury; and (4) no adequate                 support finding, the evidence is legally
        remedy at law.                                          sufficient.

        Cac;es that cite this headnote                          Cases that cite this headnote


 [20)   Appeal nnd Error                                 [24)   Evidence
            Injunction                                               Sufficiency to suppmt verdict or
        Appeal and Enor                                         finding
            Refusing injunction                                 When evidence offered to prove vital fact
        Court of Appeals reviews trial court's                  is so weak as to do no more than create
        grant or refusal of permanent injunction                mere surmise or suspicion of its existence,
        to determine whether it clearly abused its              evidence is no more than a scintilla and,
        discretion.                                             in legal effect, is no evidence.

        Cases that cite this headnote                           Cases that cite this headnote


 [21)   Appeal and Error                                 (25)   Evidence
            Abuse of discretion                                       Sufficiency to suppmt verdict or
                                                                tin ding
        Under abuse of discretion standard, legal
        and factual sufficiency of evidence are                 If evidence furnishes reasonable basis
        not independent grounds for reversal, but               for differing conclusions by reasonable
        sufficiency of the evidence is a relevant               minds as to existence of a vital fact, then
        factor in determining whether trial court               there is legally sufficient evidence, more
        had sufficient evidence to exercise its                 than a scintilla, to support the fact.
        discretion.
                                                                Cases that cite this headnote
        Cases that cite this headnote
                                                         [26]   Appeal and Error
 (22]   Appeal nnd Err·or                                          Extent of Review
            Verdict                                             Appeal and Error
        Appeal and Error                                             Clear or palpable weight or
           Extent of Review                                     preponderance
        When reviewing the legal sufficiency                    When reviewing factual sufficiency of
        of the evidence to support finding,                     evidence, Court of Appeals examines all
        Court of Appeals considers all the                      evidence and sets aside finding only if it
        evidence, crediting evidence in support                 is so contrary to evidence as to be clearly
        of verdict if reasonable jurors could, and              wrong and unjust.
        disregarding evidence contrary to verdict
                                                                Cases that cite this headnote
        unless reasonable jurors could not.

        Cases that cite this headnote                    [27]   Injunction
                                                                    Breaches in general
[23)    Appeal and E1·ror                                       Limited partnership created by investor
            Sufficiency of Evidence in Support                  to purchase and hold investment
        When reviewing the legal sufficiency of                 in apartment complex performed or
        the evidence to support finding, if there               threatened to perform wrongful act
        is more than a scintilla of evidence to                 against business that created investment



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        offering, as required for business to                    in business's subsequent suit for
        be entitled to permanent injunction                      breach of parties' prior settlement
        against partnership in business's action                 agreement pertaining to underlying
        for breach of parties' prior settlement                  actions stemming from investment
        agreement pertaining to underlying                       offering; threat would have caused
        actions stemming from investment                         business injury that was either not able
        offering; investor was manager of                        to be compensated by damages or was
        corporation that was limited partnership's               not able to be measured by any certain
        general partner, and investor performed                  monetary standard.
        or threatened to perform wrongful act
        against business.                                        Cases that cite this headnote

        Cases that cite this headnote
                                                          [301   Injunction
                                                                      Irreparable injury
 (28]   Injunction                                               Injury is "irreparable injury," as required
            Breaches in general                                  for party to be entitled to injunction,
        Inclusion of limited partnership created                 if injured party cannot be compensated
        by investor to purchase and hold                         in damages or if damages cannot
        investment in apartment complex in                       be measured by any certain monetary
        injunction granted in suit filed against                 standard.
        investor by business that created
        investment offering for breach of parties'               Cases that cite this headnote
        prior settlement agreement pertaining
        to underlying actions stemming from               [31]   Injunction
        investment offering did not render                           Adequacy of remedy at law
        injunction     overly    broad,    despite
                                                                 Existing legal remedy is adequate, such
        contention that limited partnership was
                                                                 that party would not be entitled to
        not in active concert or participation
                                                                 permanent injunction, if it is as complete,
        with investor; investor was manager of
                                                                 practical, and efficient to the ends of
        limited partnership's general partner, and
                                                                 justice and its prompt administration as is
        investor's actions in breach of agreement
                                                                 equitable relief.
        were not made solely on his own behalf.
        Tex. R. Civ. P. 683.                                     Cases that cite this headnote

        Cases that cite this headnote
                                                          (32]   Injunction
                                                                  ~ Breaches in general
 (29)   Injunction
                                                                 There was legally and factually sufficient
             Breaches in general
                                                                 evidence to support trial court's finding,
        Investor's threat to send copies of
                                                                 in granting injunction against investor and
        complaint regarding investment offering
                                                                 limited partnership created to purchase
        created by business to other investors
                                                                 and hold investment in action filed by
        involved in business's investment
                                                                 business that created investment offerings
        offerings would have, if carried
                                                                 for breach of parties' prior settlement
        out, constituted irreparable injury, as
                                                                 agreement pertaining to prior actions
        required for business to be entitled to
                                                                 stemming from investment offering, that
        permanent injunction against investor
                                                                 business had no adequate remedy at law;
        and limited partnership created by
                                                                 testimony that it would take significant
        investor to purchase and hold investment
                                                                 time to repair damage from investor




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Leibovitz v. Sequoia Real Estate Holdings, L.P .• --- S.W.3d ---- (2015)


        carrying out threat to send complaint                     Valid jury instruction assists jury,
        regarding investment to other investors,                  accurately states the law, and finds
        in breach of agreement, showed that                       support in pleadings and evidence.
        enjoining limited partnership and investor
        from contacting other investors before                    Cases that cite this headnote
        investor carried out threat was a more
        efficient remedy than any award of                 (35]   Appeal and Error
        damages.                                                   ~   Conduct of trial or hearing in general

        Cases that cite this headnote                             Court of Appeals does not disturb trial
                                                                  court's decision on which instructions to
                                                                  submit to jury absent abuse of discretion.
 [33]   Constitutional Law
             Injunctions and restraining orders                   Cases that cite this headnote
        Injunction
             Breaches in general                           (361   Damages
        Granting request for injunction by                             Mode of estimating damages in
        business that created investment offerings                general
        against investor and limited partnership                  "Benefit-of-the-bargain standard" for
        created by investor to purchase and                       measuring damages is the difference in
        hold investment was not illegal prior                     value given and value received.
        restraint on speech in business's action
        against investor for breach of parties'                   Cases that cite this headnote
        prior settlement agreement pertaining
        to underlying actions stemming from
                                                           1371   Appeal and Error
        investment offering, even though investor
                                                                       Instructions
        was enjoined from sending additional
                                                                  Investor waived argument for review
        complaint against business related to
                                                                  that evidence   ..... was insufficient to
        investment to other investors; investor
                                                                  support damages question instructing
        agreed not to engage in certain actions,
                                                                  jury to measure damages in favor of
        including disparagement of other parties,
                                                                  business that created investment offering
        in settlement agreement, investor agreed
                                                                  under benefit-of-the-bargain standard in
        that violation of that provision of
                                                                  business's action against investor for
        agreement was enforceable through
                                                                  breach of settlement agreement pertaining
        injunctive relief, and injunction was
                                                                  to underlying actions stemming from
        narrowly tailored and did nothing more
                                                                  investment offering, since investor did not
        than enforce restraint on speech investor
                                                                  object to jury instruction on such ground
        agreed to in settlement agreement. Tex.
                                                                  in trial court. Tex. R. Civ. P. 274.
        Const. art. 1, § 8.
                                                                  Cases that cite this headnote
        Cases that cite this headnote

                                                           [38]   Costs
 (34)   Trial
                                                                      Prevailing party
             Sufficiency as to Subject-Matter
                                                                  Award of attorney fees in favor of
        Trial
                                                                  business that created investment offering
             Matters of law
                                                                  was proper in action against investor
        Trial                                                     for breach of parties prior settlement
             Application of Instructions to Ca..c;e
                                                                  agreement pertaining to underlying
                                                                  actions stemming from investment


                                                                                                                7
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Leibovitz v. Sequoia Real Estate Holdings, l.P.J --- S.W.3d ---- (2015)


        offering; settlement agreement provided          the taxes due from that sale by investing the
        for attorney fees, requiring that                proceeds in another investment. Holdings, which
        substantially non-prevailing party bear          was operated by Donald Behunin, created real-estate
        any fees and expenses incurred by                investment offerings, including Sequoia Frankford
        substantially prevailing party, and              Springs, an investment offering concerning an
        business was clearly and substantially           apartment complex in Dallas. 2 In the Private
        prevailing party.                                Placement Memorandum (essentially a prospectus) for
                                                         the Sequoia Frankford Springs investment, Holdings
        Cases that cite this headnote
                                                         offered qualified investors 3 the opportunity to
                                                         purchase tenancies in common in the complex and
                                                         promised a 6.5 percent annual return. Leibovitz
                                                         invested the tax-deferred money in Frankford Springs
On Appeal from the 116th Judicial District Court,
                                                         as a tenant in common with twenty-seven other
Dallas County, Texas, Trial Court Cause No. DC-11-
                                                         tenant-in-common investors. As required by the
14357-F, Tonya Parker, Judge
                                                         Private Placement Memorandum, Leibovitz created
Attorneys and Law Firms                                  the limited partnership SFS 23 to purchase and hold
                                                         the investment.
Charles R. Nichols, Garland, TX, for appellants.
                                                           *2 The structure of the investment and what
Edward Jason Dennis, Samuel Hardy IV, Dallas, TX,
                                                         happened to the money is complex involving many
for appellees.
                                                          entities including the name "Sequoia," and the
                                                          structure is not entirely clear from the record.
Before Justices Myers, Evans, and O'Neill 1
                                                         However, it appears the Frankford Springs apartment
                                                         complex was purchased in 2006 by Sequoia Frankford
                                                          Springs, L.P. The twenty-eight tenant-in-common
                                                         investors, through Sequoia Frankford Springs, L.P.,
                        OPINION
                                                         paid cash (Leibovitz testified he invested cash
Opinion by Justice Myers                                 of $378, 781.50), executed a nonrecourse note for
                                                         $21,400,000, and granted the lender a deed of trust to
 *1 Jeffrey Leibovitz and Sequoia Frankford              secure the note. According to the Private Placement
Springs 23, L.P. (SFS 23) appeal the trial court's       Memorandum, the money and debt provided by
judgment enjoining them from breaching a settlement      the investors was to be used to purchase the
agreement, awarding Sequoia Real Estate Holdings,        property, create certain reserves, and pay expenses
L.P. damages of $2,500 against Leibovitz for breach      described in the Private Placement Memorandum.
of the settlement agreement, and awarding Holdings       The investors signed a master lease agreement with
attorney's fees of $200,000 against both appellants.     Sequoia Frankford Springs LeaseCo, LP (LeaseCo)
Appellants bring thirteen issues on appeal contending    as Master Tenant, which was to pay rent to the
the trial court erred by granting Holdings' motion       investors of $789,653 per year, which would provide
for summary judgment on appellants' affirmative          a return of over 6.5 percent to the investors
defenses, imposing an injunction on appellants,          on their cash investment. LeaseCo would manage
awarding Holdings damages, and awarding Holdings         the property through its contractor, Sequoia Real
attorney's fees against SFS 23. We affirm the trial      Estate Management, L.P ., and sublease the units to
court's judgment.                                        the individuals who would actually reside in the
                                                         apartments and pay rent. LeaseCo would pay Real
                                                         Estate Management four percent of the gross revenues
                                                         earned by the apartment complex. Behunin was
                  BACKGROUND
                                                         the president of Holdings; the president, secretary,
In 2006, Leibovitz sold investment property in           treasurer, and sole manager of LeaseCo's general
California. The law permitted Leibovitz to defer


VVestlavt~Next@   201    Thomson Reuters. No daim                                                                 8
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Leibovitz v. Sequoia Real Estate Holdings, L.P., --- S.W.3d ---- (2015)


partner; and the chief executive and chief financial         interest, escrow deposit, and fees. To pay this amount,
officer of Sequoia Real Estate Management.                   Holdings made a "cash call" to the investors to pay
                                                             their pro-rata share of the amount. Sequoia Frankford
The investors in Frankford Springs received only 4.64        Springs, L.P, deeded the property to the investors. In
percent return on investment instead of the promised         the "Settlement and Mutual Release Agreement" (the
6.5 percent. In 2009, LeaseCo missed some note               Agreement), the parties agreed to dismiss the two
payments to the lender. On February 10, 2010, the            pending lawsuits against one another. The Agreement
lender notified LeaseCo that the note was in default.        provided for the distribution ofthe funds from the cash
On June 4, 2010, the lender notified LeaseCo that            call. The Agreement also terminated the Master Lease
the loan was accelerated and the property posted             with LeaseCo and provided that a new management
for foreclosure. When the investors learned Behunin          group, unaffiliated with Behunin and the Sequoia
and LeaseCo had stopped paying the note and that             entities, would manage the property under a new asset
the property was facing foreclosure, some of them,           management agreement. 4 The Agreement contained
including Leibovitz, questioned Behunin and the              a "Confidentiality and Non-Disparagement" provision
Sequoia entities' management ofthe project, including        in which the parties agreed not to disclose the terms
why the money generated by the property was not              and conditions of the Agreement "to any individual or
used to pay the note. Behunin sued Leibovitz and other       entity." The provision stated that the parties "further
investors for libel and business disparagement.              agree not to make any derogatory, disparaging and/
                                                             or untruthful statements about any other party to
Another group of investors, not including Leibovitz,         any person or entity." The Agreement stated that
sued Behunin and the Sequoia entities operating              violation of this provision would be a breach of
Frankford Springs. In this lawsuit, the investors            the Agreement and would entitle the non-breaching
alleged that Behunin and the Sequoia entities                party to immediate injunctive relief against further
committed fraud by failing to provide necessary              violations of the provision. Leibovitz signed the
information in the Private Placement Memorandum,             Agreement as manager of SFS 23's general partner and
misrepresented the expected return on investment at          signed on his own behalf agreeing that he was bound
6.5 percent when the appraisal ofthe property showed         by the terms and conditions of the Agreement.
only a 4.64 percent return was possible and that
the property would lose money, and misrepresented             *3 After signing the Agreement, Leibovitz learned
the condition of the property as being satisfactory          that some ofthe money from the initial cash investment
when the property required $508,000 of capital               was being used in ways he believed were not disclosed
improvements in the first three and one-half years           in the Private Placement Memorandum. Holdings,
of operation. The investors also alleged Behunin and         managed by Behunin, was the sponsor of four other
the Sequoia entities breached the agreement with the         tenancy-in-common investment offerings in the Dallas
investors to make the payments on the note by failing        area, which operated similarly with a "LeaseCo"
to make three of those payments and then further             entity as the master tenant managing the property and
breached the agreement by failing to forward the             paying rent to the investors. Leftover funds from the
lender's notice of default to the investors. The investors   initial investment of each offering were pooled in
alleged Behunin and the Sequoia entities converted           Holdings. Holdings would then lend that money to
about $128,000 of the property's funds.                      master tenants, including Frankford Springs LeaseCo,
                                                             that needed funds to pay rent to the investors. Only one
For almost a year, negotiations continued with the           of the properties, not Frankford Springs, was able to
lender and amongst the parties to the two lawsuits.          pay its rent to the investors solely from the operations
Effective March 31, 2011, the bank agreed to reinstate       of the property. Thus, many investors were paid the
the loan, and the parties to the lawsuits and all the        rent from their own investment funds and with the
investors and business entities involved in Frankford        investment funds from other properties instead of from
Springs entered into a settlement agreement. Before          the funds the properties actually earned by leasing
reinstating the loan, however, the lender required the
                                                             to residents. 5 In this case, LeaseCo did not inform
payment of about $1,256,400 in past due principal,
                                                             appellants and the other investors that the property was


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Leibovitz v. Sequoia Real Estate Holdings, L.P., --- S.W.3d ---- (2015)


not generating sufficient income to pay the rent to them
and that the rent was being paid by LeaseCo borrowing
                                                                         RELEASE PROVISIONS
money from Holdings.
                                                                          IN THE AGREEMENT

On November 8, 2011, Leibovitz sent an e-mail to the        The parties' Settlement and Mutual Release Agreement
brokers that sold him the investment stating that, unless   stated that the parties, which included appellants,
the brokers paid Leibovitz for the losses he suffered       Holdings, and Behunin,
through the investment, he would file complaints with
the Financial Industry Regulatory Authority (FINRA)           hereby fully and finally mutually release one
and the Securities and Exchange Commission (SEC)              another of and from any and all presently existing
and send copies of the complaints to all the investors        claims, demands, promises, causes of action, and/or
in Holdings' other investment offerings. Holdings then        similar rights of any type of whatever kind or nature
filed the current suit seeking an injunction barring          ("Claim "), whether known or unknown, relating to
Leibovitz from filing the complaint with FINRA and            and/or arising in any way out of the Dispute, the
the SEC and from communicating with investors in              Property and/or any other matter whatsoever from
the other investment offerings. 6 The trial court issued      the beginning of time to the present.
a temporary restraining order. At the hearing on the
                                                               *4 In further exchange for the covenants and
temporary injunction, Leibovitz testified that unless he
                                                              consideration set forth herein, the Parties agree that
was enjoined from doing so, he would file a complaint
                                                              they will not bring or assert in any manner, either
with FINRA and would send a copy ofthe complaint to
                                                              directly or indirectly, any Claims, professional
the investors in Holdings' other investment offerings.
                                                              grievances, professional liability claims, allegations
                                                              of misconduct, litigation, arbitration and/or any
Leibovitz asserted numerous affirmative defenses
                                                              other form of adversary proceeding relating to and/
to Holdings' claims. Holdings moved for summary
                                                              or arising in any way out of any presently existing
judgment on the defenses. The trial court granted
                                                              claim relating to the Dispute, the Property and/or
summary judgment on most of the defenses. Holdings'
                                                              any other matter whatsoever from the beginning of
claim of breach of contract was tried before a jury,
                                                              time to the present, whether same is presently known
which found Leibovitz liable and found Holdings
                                                              or unknown.
suffered damages of $2,500.
                                                              For the purpose ofimplementing a full and complete
The trial court's judgment awarded Holdings damages           release and discharge of each other, the Parties
of $2,500 against Leibovitz and attorney's fees               expressly acknowledge that this Agreement is
of $200,000 against both appellants. The court                intended to include in its effect, without limitation,
also imposed a permanent injunction on appellants,            any and all claims that the Parties do not know or
prohibiting them from (a) disclosing the existence            suspect to exist in their favor at the time of execution
or terms of the Agreement to anyone not a party to            hereof, and that this Agreement contemplates the
the Agreement; (b) communicating with any of the              extinguishment of those claims.
investors in Holdings' other investment offerings that
appellants had threatened to contact; and (c) bringing
or asserting any claims relating to the "dispute" as
                                                              It is the express intention of the Parties to this
defined in the Agreement. The trial court stated in the
                                                              Agreement that these mutual releases and associated
order that the permanent injunction did not prohibit
                                                              definitions be construed as broadly as possible
appellants from reporting a crime to law-enforcement
                                                              to effectuate the Parties' desire for absolute and
authorities or from providing testimony in response to
                                                              complete peace going forward in relation to all
an inquiry from any regulatory authority as long as
                                                              dealings between them whatsoever. The Parties do
appellants did not initiate the inquiry.
                                                              not intend to except any entity or claim of any
                                                              kind from these releases, except breaches of this
Appellants now appeal from this judgment.
                                                              Agreement.



                                                                                                                         0
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Leibovitz v. Sequoia Real Estate Holdings, l.P.J --- S.W.3d ---- (2015)


                                                              fraud by nondisclosure. Appellants alleged Holdings
The Agreement defined "the Dispute" as "any and               committed fraud leading to the Agreement by failing
all issues and matters that have been discussed and           to inform appellants that the funds they and the other
debated relating to, among other things, including            investors in the property invested were placed in an
without limitation, the Property, the Master Lease            integrated fund with investment monies from other
Agreement, the TIC [Tenants in Common] Agreement              Holdings investment projects and not used solely
and/or the PPM [Private Placement Memorandum]."               for Frankford Springs. Appellants alleged Holdings
                                                              commingled the funds of numerous real estate projects
                                                              and used those funds as needed for all the real
              SUMMARY JUDGMENT                                estate projects. Appellants alleged these facts were
                                                              required to be disclosed in the Private Placement
In their first five issues, appellants contend the trial      Memorandum but were not disclosed. Appellants also
court erred by granting Holdings' motion for summary          alleged Holdings failed to disclose a due-diligence
judgment on their affirmative defenses. The standard          report stating that the Frankford Springs real estate
for reviewing a traditional summary judgment is               project would never perform as represented.
well established. SeeNi.:wn v. A1r. Prop. Mgmt. Co.,
690 S. W.2d 546. 548-49 (Tex.l985); ,'lk.·1fee, Inc.           *5 [1] Holdings moved for summary judgment on
v. Agilysys, bu:., 316 S.W.3d 820. 825 (Tex.App ...-·         the fraud defenses, asserting appellants disclaimed
Dallas 2010, no pet.). The movant has the burden of           in the Agreement the element of reliance necessary
showing that no genuine issue of material fact exists         for appellants' affirmative defenses based on fraud.
and that it is entitled to judgment as a matter of            Reliance by the party asserting fraud is an element
law. TEX. R. ClV. P. l66a(c). In deciding whether a           of the defenses of fraudulent inducement, fraudulent
disputed material fact issue exists precluding summary        concealment, and fraud by nondisclosure. In re Int'l
judgment, evidence favorable to the nonmovant will be         Pr(?fit Assocs.. Inc., 274 S.W.3d 672, 678 ('I'ex.2009)
taken as true. Nixon. 690 S. \V .2d at 549; 1n re Estate of   (false representation "was intended to be and was
Beny, 280 S.W.3d 478, 480 (Tex.App.-Dallas 2009,              relied upon by the injured party" as element of
no pet.). Every reasonable inference must be indulged         fraudulent inducement); Wise v. SR Dall., LLC, 436
in favor of the nonmovant and any doubts resolved in          S.W.Jd 402,409 (Tex.App.·-Dallas 2014. no pet.)("the
its favor. City of Keller v. Wilson, 168 S. W .3d 802,        listener relies on the nondisclosure resulting in injury"
824 (Tex.2005 ). We review a summary judgment de              is element of fraud by nondisclosure); Mitchell Energy
novo to determine whether a party's right to prevail is       Corp. v. Bartlett, 958 S.\V.2d 430, 439 (Tex.App.·-··
established as a matter oflaw. Dickey v. Club Cmp., 12        Fort \Vorth 1997, pet. denied) ("plaintiffs reasonable
S.Vv.3d 172, 175 (Tex.App.-Dallas 2000. pet. denied).         reliance on the deception" is element of fraudulent
When a trial court's order granting summary judgment          concealment).
does not specify the grounds relied upon, the reviewing
court must affirm the summary judgment if any of               [2]    [3]     [4] In general, a contract is subject to
the summary judgment grounds are meritorious. Fi\1            avoidance on the ground of fraudulent inducement.
Props. Operating Co. v. City ofAustin, 21 S.\V.3d             However, in some situations, the parties can agree
868, 872 (Tex.2000); Furmanite Worldwide, Inc. v.             in the contract to waive the right to assert fraud
NextCorp.. Ltd, 339 S.\V.3d 326, 331 (Tex.App.-               as a defense to breach of the contract by expressly
Dallas 20 ll, no pet.).                                       disclaiming reliance. SeeForest Oil Corp. v. J\!cA/len,
                                                              268 S.W .3d 51, 58 (Tex.2008); Schlumbet~qer Tech.
                                                              Coq;. v. Swanson, 959 S.\V.2d 171, 179 (Tex.1997).
                                                              The factors most relevant to whether there was a
                         Fraud
                                                              waiver of reliance precluding an affirmative defense of
In the first three issues, appellants contend the             fraud are whether:
trial court erred by granting Holdings' motion for
                                                                1. the terms of the contract were negotiated, rather
summary judgment on appellants' affirmative defenses
                                                                than boilerplate, and during negotiations the parties
of fraudulent inducement, fraudulent concealment, and



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Leibovitz v. Sequoia Real Estate Holdings, L.P., --- S.W.3d ---- (2015)


  specifically discussed the issue which has become
  the topic of the subsequent dispute;                        J. Review and Understanding ofAgreement

  2. the complaining party was represented by                   a. The Parties ... acknowledge and agree that
  counsel;                                                      they have carefully read this Agreement and have
                                                                asked any questions needed to understand the
  3. the parties dealt with each other in an arm's length       terms, consequences and binding effect of this
  transaction;                                                  Agreement.

  4. the parties were knowledgeable in business                 b. Each Owner acknowledges and agrees that the
  matters; and                                                  Attorneys have not made and will not make any
                                                                representations, warranties and/or covenants with
  5. the release and non-reliance language was clear.           respect to any federal, state or local income tax
                                                                consequences to the Owners ....
Forest Oil Corp., 268 S.W.3d at 60. The court also
added a sixth factor, stating the fact that an agreement         *6 c. The Parties ... acknowledge and agree
is a "once and for all" settlement constitutes an               that they are sophisticated and that they
additional factor for rejecting fraud-based claims. Id          had an opportunity to review this Agreement
at 58.                                                          with independent legal counsel, accountants,
                                                                CPAs, advisors and/or other professionals or
Concerning the fifth factor, the supreme court stated           representatives of their own choosing.
the factor with reference to clarity of the release
language, but throughout the opinion, the court                 d. The Parties ... further understand that this
examined the clarity of the non-reliance language as            Agreement is the full, final and complete
well. For example, "[a]n all-embracing disclaimer of            agreement between the Parties, even if the final
any and all representations ... shows the parties' clear        tax consequences and/or monetary distributions
intent." ld at 58; see a/soid at 59 ("the release ...           are different from what was original[ly]
mak[es] clear that at the time of the agreement, the            anticipated by the Owners.
parties disclaimed reliance"). In rejecting the argument
that the breadth of the clear non-reliance language             e. The Parties ... represent and warrant that
should be viewed as limited to the more narrow release          they have been fully informed and have full
language, the court reasoned that the parties' agreement        knowledge of all of the terms, provisions,
"makes clear the parties intended an exhaustive waiver          conditions, and effects of this Agreement, and
unconfined to claims specifically released." ld at 59.          they are fully satisfied with the terms and effects
Therefore, we understand that the subject of the fifth          of this Agreement.
factor is the clarity of both the language effecting the
                                                                f. The Parties ... warrant and represent that they
release and the language disclaiming reliance.
                                                                have full standing and capacity to enter into this
                                                                Agreement, that they execute this Agreement of
Whether a contract's disclaimer-of-reliance provision
                                                                their own free will and accord for the purposes
negates an assertion of fraud as a defense is a question
                                                                and the consideration set forth herein.
oflaw reviewed de novo. ld at 55 & n. 9.
                                                                g. The Parties .. . warrant and represent that no
The Agreement provided,                                         promise or inducement has been offered or made,
                                                                except as herein set forth, and that this Agreement
  D. Jointly Drafted; Savings Clause
                                                                is executed voluntarily and without reliance upon
                                                                any statement or representation by any party,
  The Parties 7 ••• agree that this Agreement was
                                                                lawyer or third party.
  jointly drafted and shall not be construed against any
  party ....                                                (Footnote and emphasis added.)




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Leibovitz v. Sequoia Real Estate Holdings, L.P., --- S.W.3d ---- (2015)


                                                            subsequent fraudulent inducement claim. We disagree.
                                                            Under Forest Oil Corp., "the topic of the subsequent
      Negotiation of the Terms of the Contract
                                                            dispute" is the specific contract term being asserted
     that Are the Subject of the Current Dispute
                                                            against the party claiming fraud. 8 This interpretation
 [51 The first factor set forth in Fore:.u Oil Corp.        goes along with the rest of the factor that "the terms of
for determining whether a disclaimer of reliance is         the contract were negotiated, rather than boilerplate."
enforceable is whether "the terms of the contract           Forest Oil C01p.. 268 S.\V.3d at 60. The terms of the
were negotiated, rather than boilerplate, and during        contract and the factual basis of the subsequent fraud
negotiations the parties specifically discussed the issue   claim are such different concepts that we believe the
which has become the topic ofthe subsequent dispute."       supreme court would have made them different factors.
Forest Oil Corp., 268 S.\V.3d at 60. In this case,          Also, in Forest Oil Corp., the court's analysis of the
the Agreement states that it was "jointly drafted" by       enforceability of the contract concerned the terms of
the parties, which indicates its terms were negotiated.     the contract Forest Oil was seeking to enforce, an
Also, Leibovitz states in his affidavit of August 9,        arbitration provision and a disclaimer of reliance, not
20 12, that there were negotiations leading to the          the allegations in the subsequent lawsuit.
Agreement: "With regards to claims by Plaintiff in
their MSJ facts that I was never represented by the         In Forest Oil Cmp.. the disclaimer of reliance stated
law firm of Walters [Bali do] and Crain in the review       the parties were not "relying upon any statement
and negotiation of the subject settlement agreement         or any representation of any agent of the parties
in the lawsuit styled Tamera Franklin et al. v. David       being released." /d. at 54 n. 4. The parties released
Freeman et al., Cause No. 10-10364, 193rd Judicial          all claims "in any manner relating to" certain oil
District, Dallas County, Texas [sic]." The "subject         and gas leases. lei at 53. The parties also agreed
settlement agreement" of the Franklin v. Freeman            to arbitrate all claims for environmental damage
lawsuit is the Agreement, so appellants have conceded       and personal injuries "relating to" the leases. When
the Agreement was negotiated. This is evident from          McAllen sued Forest Oil for environmental damage,
the provision of the Agreement that the parties would       Forest Oil invoked the arbitration clause. ld at 54.
dismiss with prejudice their claims in the "Franklin-       McAllen argued the arbitration provision was induced
Behunin-SREM Lawsuit," which was defined as                 by fraud and was therefore unenforceable because
meaning "Case No. DC-10-10364-L." The cause                 a lawyer for Forest Oil told him there was no
numbers ofthe lawsuits mentioned in the affidavit and       environmental contamination on the property. ld at
in the Agreement are the same. Therefore, "the subject      55. McAllen argued that the disclaimer of reliance
settlement agreement," the "negotiation" of which           applied only to the released claims and not to the
Leibovitz states he was not represented by "Walters         arbitration provision. ld. at 58·--59. The supreme
[Balido] and Crain," was the Agreement at issue in          court disagreed and stated, "the parties disclaimed
this appeal. Accordingly, appellants have conceded the      reliance with respect to all decisions being made
Agreement was negotiated.                                   during negotiations, including the decision to resolve
                                                            future disputes regarding environmental and personal-
 *7 Appellants also argue that the parties did not          injury claims via arbitration." Id at 59. The court's
specifically discuss the issues that became the topics      decision was not based on any similarity between the
of this dispute, namely, ( 1) Behunin's combining the       topics of discussion during negotiations and the factual
funds of multiple investment projects and using the         allegations of McAllen's fraudulent inducement claim.
funds from Frankford Springs to pay the shortfalls
of other investments managed by Behunin and                 Likewise, in this case, "the parties disclaimed reliance
his entities, and (2) Holdings' failure to include          with respect to all decisions being made during
the due diligence report showing the unprofitable           negotiations,"id. including the decisions that the
nature of Frankford Springs in the Private Placement        parties released one another "from any and all
Memorandum. Under appellants' interpretation, then,         presently existing claims ... , whether known or
"the issue which has become the topic of the                unknown, relating to and/or arising in any way
subsequent dispute" is the factual basis of the             out of the Dispute, the Property, and/or any other



                                                                          Government \AJorks.                           3
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Leibovitz v. Sequoia Real Estate Holdings, L.P., --- S.W.3d ---- (2015)


matter whatsoever from the beginning of time to the         which the Agreement defined as including Leibovitz
present." Appellants do not assert on appeal that the       and SFS 23. 9 The Agreement also states appellants
parties failed to discuss this release provision in their   "had an opportunity to review this Agreement with
negotiations.                                               independent legal counsel." In an e-mail, Leibovitz
                                                            referred to "my attorney" addressing Leibovitz's
However, even if it were required that the parties          concerns about the defamation lawsuit, which was
had to have discussed the facts of the subsequent           one of the disputes leading to the Agreement. In
lawsuit, the facts discussed by the parties during          his affidavit, Leibovitz stated that Walters Balido &
negotiation of the Agreement were closely related to        Crain were not representing him on the settlement
the facts alleged in this lawsuit. The Agreement settled    agreement. However, that testimony is not evidence
the two pending lawsuits, which involved the issues         that he did not have counsel to advise him about the
of what happened to the money generated by the              Agreement.
property and appellee's failure to disclose information
in the Private Placement Memorandum showing that            Leibovitz also testified in his deposition that he did
the investment could not meet the promised rate             not have counsel to advise him on the Agreement and
of return and would be unprofitable. These lawsuits         that Eastman did not represent him or SFS 23. Even
were dismissed by the Agreement. Appellants' claims         if Leibovitz signed the Agreement without consulting
of fraud in this case-the failure to disclose in the        an attorney, the Agreement states, and Leibovitz does
Private Placement Memorandum the integration of the         not dispute, that he "had an opportunity to review this
investment funds for Frankford Springs with those of        Agreement with independent legal counsel." The fact
other investment projects and the failure to disclose       that Leibovitz had the opportunity to consult a lawyer
the due diligence report showing the unprofitability        (as stated in the Agreement) and the evidence that he
of the investment-involve those same issues of what         had access to attorneys (as shown by his representation
happened to the money in the investment and the             by an attorney in the defamation lawsuit and the
failure to disclose necessary information in the Private    Agreement's statement that there was an attorney
Placement Memorandum. See Tex. Std. Oil & Gas, L. P.        for the Owners) support enforcement of the waiver-
l'. Frankel Offihore Energy, Inc .. 394 S.\V.3d 753,
                                                            of-reliance provision. SeeRAS Grp., Inc. v. Rent-A-
772 (Tex.App.-lfouston [14th Dist.] 2012, no pet.)          Center E., Inc., 335 S.W.3d 630, 640 (Tex.App.-·-·
("However, the Forest Oil court did not opine that          Dallas 10 I0. no pet.)(fact that parties had lawyers they
the parties must have discussed the exact grounds that      regularly used and had the opportunity to consult with
form the basis of the subsequent dispute, in order to       them supported enforcement of disclaimer-of-reliance
satisfy this factor."); cfF'orest Oil CoqJ., 168 S.W.3d     clause even though parties testified they could not
at 58 (parties' negotiations discussed environmental        remember if they submitted the agreement to their
matters and treatment of surface issues, which touched      lawyers). Leibovitz's personal decision not to protect
on the subject of the fraud, the burying of highly toxic,   his interests by having counsel advise him on the
mercury-contaminated material on the property).             Agreement should not bar enforcement of the waiver-
                                                            of-reliance provision.
 *8 We conclude appellants have not shown the trial
court erred by determining "the parties specifically
discussed the issue which has become the topic of the
subsequent dispute."                                                     Arm's-Length Transaction

                                                             (7) The record also shows the Agreement was an
                                                            arm's-length transaction. At the time ofthe Agreement,
             Representation by Counsel                      Leibovitz and other investors were in litigation against
                                                            Holdings, and the record shows there were attorneys
 [6] Concerning whether appellants were represented         on all sides. Leibovitz admitted in his affidavit that
by counsel before signing the Agreement, a provision        there were "negotiations" leading to the Agreement.
of the Agreement (not quoted above) states that             We conclude this evidence established the Agreement
Joel M. Eastman was the attorney for the "Owners,"          was an arm's-length transaction.



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                                                             and concerning any "matter whatsoever, from the
                                                             beginning oftime to the present."

        Knowledgeable in Business Matters

 [8] The next factor is whether the parties were                         "Once and for All" Settlement
knowledgeable in business matters. The Agreement
states the parties "are sophisticated." In order to invest    [10] The Agreement is clear that the settlement was
in the project, Leibovitz and his wife must have had         intended to be a "once and for all" settlement. The
combined incomes of more than $300,000 per year              Agreement stated,
for the preceding two years and prospects of the
same for the following year or assets of more than             For the purpose of implementing a full and complete
$1 million. See supra note 3. Leibovitz states in his          release and discharge of each other, the Parties
affidavit that he is not a lawyer, real estate broker,         expressly acknowledge that this Agreement is
or securities investment professional, but these facts         intended to include in its effect, without limitation,
do not show he was not "sophisticated." Moreover,              any and all claims that the Parties do not know or
the Private Placement Memorandum required that                 suspect to exist in their favor at the time of execution
all investors state in writing that they "have such            hereof, and that this Agreement contemplates the
knowledge and experience in financial and business             extinguishment of those claims.
matters that [they] are capable of evaluating the merits
and risks of an investment in an Interest and have the
ability to protect [their] own interests in connection         It is the express intention of the Parties to this
with such investment." By entering into the investment         Agreement that these mutual releases and associated
with these requirements, Leibovitz conceded he was             definitions be construed as broadly as possible
knowledgeable in business matters.                             to effectuate the Parties' desire for absolute and
                                                               complete peace going forward in relation to all
                                                               dealings between them whatsoever. The Parties do
             Clarity of the Release and                        not intend to except any entity or claim of any
         Disclaimer-of-Reliance Language                       kind from these releases, except breaches of this
                                                               Agreement.
 *9 [9] The language of the release and non-reliance
clauses is clear. In addition to the parties releasing       The Agreement could not be clearer that the parties
one another from "any and all presently existing             intended the Agreement to be a "once and for all"
claims, demands, promises, causes of action, and/            settlement of all claims related to the investment. As
or similar rights of any type of whatever kind or            the supreme court stated in Forest Oil Corp.. the fact
nature ("Claim"), whether known or unknown, relating         that an agreement is a "once and for all" settlement is
to and/or arising in any way out of the Dispute,             an additional factor for rejection of fraud-based claims.
the Property and/or any other matter whatsoever              SeeForest Oil Corp., 268 S.\V.3d at 58.
from the beginning of time to the present," those
who signed the Agreement acknowledged that they
did so "voluntarily and without reliance upon any                             Special Relationship
statement or representation by any party, lawyer
or third party." (Emphasis added.) In other words,           Appellants contend the trial court erred by granting
the parties did not rely on any representation by            Holdings' motion for summary judgment on appellants'
any other party when they gave up any rights they            affirmative defenses of fraudulent concealment and
may have had regarding a complaint about another             fraudulent inducement because there was a special
party that existed on March 31, 2011, the effective          relationship between Holdings and appellants resulting
date of the Agreement, regardless of whether the             in a fiduciary duty to disclose material facts and
complaining party knew of the complaint's existence,         information related to the investment. Regardless of
                                                             the factual basis for the assertion of fraud, appellants



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Leibovitz v. Sequoia Real Estate Holdings, l.P .• --- S.W.3d ---- (2015)


would have to prove reliance, which they disclaimed.                   United States, shall be fined
Appellants do not cite any authority concluding that a                 under this title or imprisoned
disclaimer of reliance is not enforceable by a fiduciary               not more than three years, or
against a party to whom the duty was owed. SeeTex.                     both.
Std Oil & Gas, L P. v. Frankel C?tlshore Energy, Inc.,
394 S.vV.3d 753, 774-76 (Tex.App.-Houston [14th             18 U.S.C. § 4. Misprision of felony has four elements:
Dist.] 2012, no pet.)(supreme court has not expressly      (1) a felony was committed; (2) the accused had
held that fiduciary relationship bars disclaimer of        knowledge of the felony; (3) the accused failed
reliance).                                                 to notify authorities; and (4) the accused took an
                                                           affirmative step to conceal the crime. United States v.
                                                           Davila, 698 F.2d 715,717 (5th Cir.l983).

                      Conclusion                            [13]     [14] "A contract to do a thing which cannot
                                                           be performed without a violation of the law is void."
After considering all six factors under Forest
                                                           Leu•is v. Davis. 145 Tex. 468, 199 S.W.2d 146, 148-
Oil Corp.. we conclude the Agreement's provision
                                                           49 (1947) (quoting Tex. Emp'rs'lns. Ass'n v. Tabor,
that appellants disclaimed the element of reliance
                                                           283 S.W. 779, 780 (Tex.Com.App.1926, judgm't
necessary to bring a fraudulent concealment,
                                                           adopted)). When the illegality does not appear on the
fraudulent inducement, or fraud by nondisclosure
                                                           face of the contract, it will not be held illegal and thus
affirmative defense is enforceable against appellants as
                                                           void unless the facts showing its illegality are before
a matter of law. We overrule appellants' first, second,
                                                           the court. ld at 149.
and third issues.

                                                           The confidentiality provision in the Agreement stated:

                Misprision of Felony                         L. Confidentiality and Non-Disparagement

 [11] In their fourth issue, appellants contend the          As mutual consideration for entering into this
trial court erred by granting Holdings' motion               Agreement, the Parties, the Released Group, and
for summary judgment on appellants' affirmative              each of their resp~ctive attorneys agree and
defense of misprision of felony. Appellants assert the       acknowledge that the fact ofthis Agreement and the
enforcement of the confidentiality provision of the          terms and conditions of this Agreement, including
Agreement would prevent appellants from reporting            the amount of consideration paid in connection with
Holdings' and Behunin's felonious activities, which          the resolution of the Dispute are confidential and
would make appellants guilty of the federal offense          shall not be disclosed to any individual or entity.
                                                             All Parties, members of the Released Group, and
of misprision of felony. 10 Appellants argue that
                                                             their attorneys agree that the response to any inquiry
because the Agreement cannot be performed without
                                                             by anyone about the status or disposition of the
the commission of a crime, the Agreement violated
                                                             lawsuits or any Claims related to the Dispute or
public policy and is void.
                                                             the Property shall be limited to the following: "The
                                                             case was resolved by the agreement of the parties."
 *10 [12] Title 18, section 4 of the United States
                                                             Notwithstanding the above, any party may disclose
Code provides:
                                                             such information to the extent reasonably necessary
            Whoever, having knowledge of                     for the purpose of tax or securities law compliance
            the actual commission of a                       and/or other legitimate business purposes and/or
            felony cognizable by a court of                  responding to any other regulatory proceedings or
            the United States, conceals and                  inquiry or as otherwise required by any law or
            does not as soon as possible                     governmental rule or regulation or court order.
            make known the same to some
                                                             The Parties and each member of the Released
            judge or other person in civil
                                                             Group further agree not to make any derogatory,
            or military authority under the



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Leibovitz v. Sequoia Real Estate Holdings, L.P., --- S.W.3d ---- (2015)



  disparaging and/or untruthful statements about any        legal right to do; (2) some illegal exaction or some
  other party to any person or entity (although this        fraud or deception; and (3) the restraint is imminent
  restriction shall not be construed to limit any           and such as to destroy free agency without present
  party's truthful testimony). The Parties and each         means of protection. Simpson v. it!Bank Dall., N.A.,
  member of the Released Group, as well as their            724 S.W.2d 102, 109 (Tex.App.--Dallas 1987, writ
  respective attorneys, acknowledge and agree that          refd n.r.e.). Whether the conduct or acts of the party
  these confidentiality provisions are material terms       accused constitute duress is a question of law, but
  of this Agreement and substantial inducements to          whether duress exists in a particular situation is a
  the settlement of this matter. The Parties and each       question of fact dependent upon the circumstances
  member ofthe Released Group further acknowledge           surrounding the situation, including the mental effect
  and agree that any violation of this paragraph            on the party claiming duress. Schuhardt Consulting
  shall be a breach of this Agreement entitling             Profit Sharing Plan v. Double Knobs Mountain Ranch,
  the non-breaching party, in addition to any other         Inc., No. 04-13-00529-CV,- S.\V.3d --~ - - ,
  rights or remedies afforded at law or in equity,          2014 \VL 7185081, at *15 (Tex.App.-San Antonio
  to immediate injunctive relief against any further        Dec. 17,2014. no pet. h.); i\1atthews v. 1\1atthews, 725
  violations thereof.                                       S.W.2d 275.278 (Tex.App.--Houston [lst Dist.] 1986,
                                                            writ refd n.r.e.).
 *11 (Emphasis added.) To the extent parts of this
provision may prohibit a party from reporting another       Holdings moved for summary judgment on several
party's illegal activities to an "authority under the       grounds, including that there was no economic duress
United States," those prohibitions are nullified by         as a matter of law because appellants expressly
the statement that the Agreement does not prohibit a        disclaimed any duress. The Agreement stated,
party from disclosing information as required by law.
Under this provision, the Agreement would not prevent         I. No Duress or Undue Influence ...
appellants from reporting felonious activities, if any,
to the appropriate authorities. Therefore, as a matter of     The Parties and the Released Group acknowledge
law, the Agreement may be enforced without any party          and agree that they enter into this Agreement
being guilty of misprision of felony.                         voluntarily and without any duress or undue
                                                              influence.
We overrule appellants' fourth issue.
                                                          [18) The parties presented almost no argument and
                                                         cited no cases concerning whether economic duress
                                                         can be disclaimed in a contract. Likewise, we have
                    Economic Duress                      found no authority on the subject. However, just as the
                                                         element of reliance may be expressly waived in certain
In their fifth issue, appellants contend the trial court
                                                         cases where it is clear that adequate due-process
erred by granting summary judgment on appellants'
                                                         protections exist, so also should the parties be allowed
affirmative defense of economic duress. Appellants
                                                         to include a term that the parties were not under duress
alleged they signed the Agreement because Behunin
                                                         when they signed it. As the supreme court stated in
and Holdings had withheld payment of the mortgage
                                                         Schlumberger, "Parties should be able to bargain for
and threatened to let the property go into foreclosure
                                                         and execute a release barring all further dispute."
unless all the parties to the Agreement signed it. 11    Schlumherger. 959 S.\V.2d at 179. The supreme court
Appellants assert "[t]here was a scintilla of evidence   stated "[t]his principle necessarily contemplates that
creating a material issue of fact." 12                   parties may disclaim reliance on representations." 1d
                                                         If parties may disclaim reliance in a case that meets
 [15]     [16]     [17] Economic duress is a defense to all the factors set forth in Schlumberger and Forest
enforcement of a contract. King v. Bishop, 879 S. \V .2d Oil Cmp., then we fail to see why the right of the
222, 224 (Tex.App.··-Tlouston [14th Dist.] 1994, no      parties "to bargain for and execute a release barring
writ). The elements of the defense are: (1) a threat     all further dispute" should not permit the parties
to do something that the threatening party has no        to disclaim economic duress. Where an arms-length



VVestlavvNe:d     20i 5 Thornson                                                                                       17
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Leibovitz v. Sequoia Real Estate Holdings, L.P., --- S.W.3d ---- (2015)


contract is negotiated, the parties are sophisticated,      prove (1) a wrongful act; (2) imminent harm; (3)
they are represented by counsel or had the opportunity      irreparable injury; and (4) no adequate remedy at
and means to obtain representation, the disclaimer          law. Henning v. One West Bank I~:S'B, 405 S.W .3d
of duress is clear, and the parties intended for the        950, 970 (Tex.App.-Dallas 2013, no pet.). We review
contract to create an end to all disputes between           the trial court's grant or refusal of a permanent
them, we conclude that parties may disclaim economic        injunction to determine whether it clearly abused its
duress. As discussed above, the Agreement meets all         discretion. Priest v. Tex. Animal Health Comm'n,
ofthese factors. Accordingly, we conclude as a matter       780 S. \V.2d 874. 875 (Tex.App.--··Dallas 1989, no
of law that appellants' statement that they signed the      writ). The trial court abuses its discretion when it
Agreement "voluntarily and without any duress or            acts arbitrarily and unreasonably, without reference to
undue influence" is enforceable.                            guiding rules or principles, or misapplies the law to the
                                                            established facts ofthe case. Triantaphyllis v. Gamble,
 *12 We overrule appellants' fifth issue.                   93 S.W.3d 398. 402 (Tex.App.-Houston [14th Dist.]
                                                            2002, pet. denied). A trial court's clear failure to
                                                            analyze and apply the law correctly constitutes an
                                                            abuse of discretion. See Webb v. Glenbrook Owners
                    INJUNCTION
                                                            Ass'n, h1c., 298 S.W.3d 374. 380 (Tex.App.--·Dallas
In the sixth through ninth issues, appellants contend       2009, no pet.). Under an abuse of discretion standard,
the trial court erred by granting Holdings' request for     the legal and factual sufficiency of the evidence are not
a permanent injunction against SFS 23. Appellants           independent grounds for reversal, but the sufficiency
do not challenge the applicability of the injunction to     of the evidence is a relevant factor in determining
Leibovitz.                                                  whether the trial court had sufficient evidence to
                                                            exercise its discretion. Beaumont Bank N.A. t'. Buller,
The trial court's order imposing the injunction states      806 S.\V.2d 223.226 (Tex.1991).
appellants would breach the Agreement by (1) filing
new claims; (2) contacting Holdings' investors and           (22]      [231    [24]     125] When reviewing the legal
making known to them the derogatory allegations             sufficiency of the evidence, we consider all the
of such claims; and (3) making the terms of the             evidence, crediting evidence in support of the verdict
Agreement public. The court observed that both              if reasonable jurors could, and disregarding evidence
appellants expressly consented in the Agreement to          contrary to the verdict unless reasonable jurors could
injunctive relief to prevent further violations of the      not. City qf Keller v. Wilson. 168 S.W.3d 802. 823,
Agreement. The court ordered that appellants (a) not        827 (Tex.2005); Aforris v. I'Vells Fargo Bank, N.A.,
disclose the existence or terms of the Agreement            334 S.W.3d 838, 842 (Tex.App.·-Dallas 2011, no
to anyone not a party to the Agreement; (b) not             pet.). If there is more than a scintilla of evidence to
communicate with Holdings' 160 other investors; and         support the finding, the evidence is legally sufficient.
(c) not bring any claims, grievances, or other litigation   Formosa Plastics C01p. USA v. Presidio Eng'rs &
relating to or arising out of any claim relating to the     Contractors, Inc.. 960 S.W.2d 41, 48 (TexJ 998).
Dispute as defined in the Agreement, the property,          When the evidence offered to prove a vital fact is so
Holdings, or any other matter. The order stated it          weak as to do no more than create a mere surmise or
did not prohibit appellants from providing testimony        suspicion of its existence, the evidence is no more than
requested by any state or federal regulatory authority,     a scintilla and, in legal effect, is no evidence. Kindred
and it did not prohibit appellants from reporting a         v. Cow'Chem, Inc.. 650 S. W.2d 61, 63 (Tex.l983). If
crime to law enforcement officials.                         the evidence furnishes a reasonable basis for differing
                                                            conclusions by reasonable minds as to the existence of
 [19]   [20]   [21] Appellants contend the trial court a vital fact, then there is legally sufficient evidence,
should not have granted the injunction against SFS     more than a scintilla, to support the fact. I d.
23 because Holdings failed to prove the elements
required to obtain an injunction. To be entitled to          *13 [26] When reviewing the factual sufficiency of
a permanent injunction, a plaintiff must plead and          the evidence, we examine all the evidence and set aside



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Leibovitz v. Sequoia Real Estate Holdings, LP., --- S.W.3d ---- (2015)


a fmding only if it is so contrary to the evidence as to   broad. Rule of civil procedure 683 provides that
be clearly wrong and unjust. 1\faritime Overseas Corp.     injunctions are "binding only upon the parties to the
v. Ellis, 971 S.W.2d 402, 407 (Tex.l998); Cameron          action, their officers, agents, servants, employees, and
v. Cameron, 158 S.\V.3d 680, 683 (Tex.App.-Dallas          attorneys, and upon those persons in active concert or
2005, pet. denied). In conducting our review of both       participation with them who receive actual notice of
the legal and factual sufficiency ofthe evidence, we are   the order by personal service or otherwise." TEX.R.
mindful that the fact finder was the sole judge of the     CIV. P. 683. Appellants contend SFS 23 does not fall
credibility of the witnesses and the weight to be given    into these categories because it was not "in active
their testimony. City ~~Keller, 168 S.\V.3d at 819;        concert or participation" with Leibovitz. We disagree.
Hinkle v. Hinkle, 223 S.\V.3d 773, 782 (Tex.App.--         Leibovitz was the manager ofSFS 23's general partner.
Dallas 2007, no pet.). We may not substitute our           The evidence did not show that Leibovitz's actions in
judgment for the fact finder's, even if we would           breach ofthe Agreement were made solely on his own
reach a different answer on the evidence. SeeAfaritime     behalf and not on behalf of SFS 23. The trial court
0Perseas Corp., 971 S.W.2d at 407; Hinkle. 223             could conclude from the evidence that SFS 23 was "in
S. \V .3d at 782.                                          active concert or participation with" Leibovitz.



                    Wrongful Act                                Imminent Harm and Irreparable Injury

 [27] Appellants argue there was no evidence SFS 23         *14 [29]       [30] Appellants also argue there was no
performed or threatened to perform a wrongful act.         evidence of imminent harm or irreparable injury. An
They argue that Holdings had to show an act or threat      injury is irreparable if the injured party cannot be
by SFS 23 separate or independent of any threat or         compensated in damages or if the damages cannot be
act by Leibovitz. We disagree. Limited partnerships,       measured by any certain monetary standard. Butnaru
such as SFS 23, act only through their general partners,   v. Ford lvlotor Co .. 84 S.W.3d I 98, 204 (Tex..2002).
and Leibovitz was the manager of the corp<?ration          As part of the Agreement, appellants promised not
that was SFS 23's general partner. SeeTEX. BUS.            to make derogatory or disparaging statements about
ORGS.CODE ANN. §§ 153.102, .152(a)(l) (West                any other party to the Agreement to any person or
2012); Nw. Otolaryngology Assocs. v. iHobilease.           entity. In an e-mail sent to the brokers who enrolled
Inc .. 786 S.\V.2d 399. 404 (Tex.App.-Texarkana            Leibovitz in the Sequoia Frankford Springs investment
1990, writ denied) ("A limited partnership acts only       offering, Leibovitz threatened to file a complaint about
through its general partner."). Appellants do not          the investment with FINRA and to send that complaint
contest that Leibovitz performed or threatened to          to the 160 investors in the other Sequoia investment
perform a wrongful act, and Leibovitz admitted             offerings. At the hearing on whether to impose a
at trial that he breached the Agreement. Behunin           temporary injunction, Leibovitz testified that unless
testified that Leibovitz threatened to communicate         he were enjoined, he would file the complaint with
with the investors in other Sequoia offerings about        FINRA and send a copy of it to every investor in the
the problems in the Sequoia Frankford Springs              other Sequoia investment offerings. Behunin testified
offering. 13 Leibovitz was the manager of SFS 23's         that Leibovitz's threatened actions, if carried out,
general partner. The trial court could have concluded      would "significantly" damage Holdings' reputation
Leibovitz breached the Agreement in his role as            and require "significant time and money" to repair.
manager of SFS 23's general partner as well as on his      The trial court could construe this evidence as showing
own behalf.                                                an imminent threat to disparage and make derogatory
                                                           remarks about Behunin, Sequoia Frankford Springs,
                                                           and Holdings to persons who were not parties to the
                                                           Agreement.
             Breadth of the Injunction
                                                           "[A]ssigning a dollar amount to such intangibles as
 [28) Appellants also contend the inclusion of SFS
                                                           a company's loss of clientele, goodwill, marketing
23 in the injunction made the injunction overly


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Leibovitz v. Sequoia Real Estate Holdings, l.P., --- S.W.3d ---- (2015)


techniques, and office stability, among others, is not    625. The Supreme Court held that such a restraint
easy." Frequent Flyer Depot, Inc. v. Am. Airlines,        on future speech was unconstitutional even though
Inc., :281 S.\V.3d 215. 228 (Tex.App.·-··Fort Wmth        it was preceded by defamatory material. Jd. at 722-
2009, pet. denied). The trial court could determine       23, 51 S.Ct. 625. In Keefe, a group of picketers
from Behunin's testimony that Leibovitz's threat to       and pamphleteers was enjoined from protesting a real
send copies of a FINRA claim to the investors in the      estate developer's business practices, Keefe. 402 U.S.
other Sequoia investments, if carried out, would cause    at 417, 91 S.Ct. 1575, and the Court held this restraint
Holdings injury that either cannot be compensated by      on free expression unconstitutional, id at 419-··20, 91
damages or that cannot be measured by any certain         S.Ct. 1575. Neither case is applicable to the case before
monetary standard.                                        us. In this case, appellants agreed not to engage in
                                                          certain actions, including disparagement of the other
We conclude there was legally and factually sufficient    parties, and appellants agreed that violation of that
evidence of imminent harm and irreparable injury.         provision could be enforced through injunctive relief.
                                                         Near and Keefe did not involve such agreements,
                                                         which is an important distinction between those cases
                                                         and the facts before us. If appellants' theory of the
            No Adequate Remedy at Law
                                                         law were correct, then any agreement not to disclose
 [31]     [32] Appellants also assert Holdings failed information would be unenforceable, which is clearly
to prove it lacked an adequate remedy at law. An         not correct. SeeTmn James ofDall., lnc. v. Cobb, 109
existing legal remedy is adequate if it is as complete,  S.\V.3d 877, 888 (Tex.App.-Da1las 2003, no pet.) ("A
practical, and efficient to the ends of justice and its  non-disclosure    agreement may be enforceable even
prompt administration as is equitable relief. Brazos     if a  covenant    not  to compete is not."); Zep I\4jg.
River Conservation & Reclamation Dist. v. Allen, 141     Co.  v. llarthcock,   824  S.\V.2d 654, 663 (Tex.App.-
Tex. 208, 171 S.\V.2d 842, 846 (1943); Hilb, Rogal       Dallas   1992,  no writ)  ("nondisclosure covenants are
& Hamilton Co. of Tex. v. Wur=man. 861 S.W.2d            not against  public policy").
30, 32 (Tex.App.---Dallas 1993, no writ). Behunin's
testimony that it would take "significant time" to        *15 Appellants also cite atticle l, section 8 of the
repair the damage from appellants carrying out the       Texas   Constitution, which provides,
threat to send the FINRA complaint to the investors
                                                                       Every person shall be at liberty
in the other Sequoia investments shows that enjoining
                                                                       to speak, write or publish his
appellants from contacting the other investors before
                                                                       opinions on any subject, being
he carried out the threat was a more efficient remedy
                                                                       responsible for the abuse of that
than any award of damages after appellants had sent
                                                                       privilege; and no law shall ever
the complaint to the other investors. We conclude
                                                                       be passed curtailing the liberty
there was legally and factually sufficient evidence that
                                                                       of speech or of the press.
Holdings lacked an adequate remedy at law.
                                                          TEX. CONST. art. I, § 8. However, appellants do not
                                                          cite any case where the enjoined party had agreed in
             Prior Restraint on Speech                    a written contract to a restriction on his speech and
                                                          agreed that the restriction could be enforced through
 [33) Appellants also contend the injunction is an        injunctive relief.
illegal prior restraint on speech. Appellants cite two
cases, Near v. A1innesota ex ref. Olson 283 U.S.         In this case, the prior restraint on appellants' speech
697. 51 S.Ct. 625, 75 L.Ed. 1357 (1930), and             was the Agreement. The injunction was narrowly
Organi:=ation for a Better Austin v. Keefe, 402 U.S.     tailored and did nothing more than enforce the restraint
415, 91 S.Ct. 1575, 29 L.Ed.2d 1 (1971). In Near, a      on speech appellants agreed to in the Agreement. We
permanent injunction barred a newspaper from ever        conclude appellants have not shown the injunction
publishing again because of its history of publishing    constituted an illegal prior restraint.
defamatory articles. Near, 283 U.S. at 706, 51 S.Ct.



                                                                                                                      20
Giant Eagle's Letter Brief                                                                                                 Page 89

                                                                                                                       R457
Leibovitz v. Sequoia Real Estate Holdings, L.P., --- S.W.3d ---- (2015)


                                                             The sole jury question in this case was:
We overrule appellants' sixth through ninth issues.
                                                               What sum of money, if any, if paid now in cash,
                                                               would fairly and reasonably compensate Sequoia
                  JURY CHARGE                                  Real Estate Holdings, L.P. ("Sequoia") for its
                                                               damages, if any, that resulted from the failure of
 [34]    [35] In their tenth issue, appellants contend the     any of the following to comply with the Settlement
trial court erred by submitting a damages question             Agreement?
instructing the jury to measure Holdings' damages
under the benefit-of-the-bargain standard. The rules of        Consider the following elements of damages, if any,
civil procedure require the trial court to "submit such        and none other.
instructions and definitions as shall be proper to enable
                                                                  The difference, if any, between the value
the jury to render a verdict." TEX.R. CIV. P. 277. A
                                                                  Sequoia gave in connection with the Settlement
valid instruction assists the jury, accurately states the
                                                                  Agreement on March 31, 2011 and the value
law, and finds support in the pleadings and evidence.
                                                                  Sequoia received from the Settlement Agreement
Thotav. Young, 366 S.W.3d 678,687 (Tex.2012). The
                                                                  at the time of the breach.
trial court has considerable discretion when framing a
jury charge. We do not disturb the trial court's decision
                                                               Do not add any amount for interest on damages, if
on which instructions to submit to the jury absent an          any.
abuse of discretion. Columbia Rio Grande Healthcare.
L.P. v. Hawley. 284 S.\V.3d 851, 856 (Tex.2009). A             Answer separately in dollars and cents for damages,
trial court abuses its discretion by failing to follow         if any, for those named below:
guiding rules and principles. I d.

 a. Jeffrey Leibovitz:                                                            $2,500.00
 b. Sequoia Frankford Springs 23, LP:                                             -0-
                                                             Leibovitz stated he would "give Mr. Behunin back his
(Jury's answers in italics.)                                 $2,800." Leibovitz then said, "I believe $2,800 is fair."
For damages, Behunin testified to the interest in the        The jury awarded Holdings $2,500 against Leibovitz.
investment and potential earnings he and the Sequoia
entities gave up as part of the Agreement. Behunin            *16 [36]       [37] The jury question asked the jurors
personally gave up about $300,000 of his limited             to measure Holdings' damages under the benefit-of-
partnership interest to the other limited partners, and      the-bargain standard, which is the difference in the
about $2,800 ofthat interest wentto SFS 23, which was        value given and the value received. Baylor Univ.
owned and controlled by Leibovitz. Additionally, the         v. Somzichsen, 221 S.\V.3d 632, 636 {Tex.2007).
Sequoia entities, by giving up the management of the         Appellants contend that in a suit for breach of a
property, gave up the right to receive about $819,000        settlement agreement, the jury should be asked to
in management fees they probably would have earned           determine the amount of consequential damages the
and the right to six percent of the price for the            plaintiff suffered, that is, the natural, probable, and
eventual sale ofthe property, which Behunin estimated        foreseeable consequence of the defendant's breach
would probably have been at least $2.1 million. The          of the settlement agreement, including the attorney's
Sequoia entities also gave up control of the escrows         fees the plaintiff incurred in defending the settlement
and reserves, worth about $274,000. According to             agreement. Appellants cite two cases in support
Behunin, he and the Sequoia entities he controlled gave      of their argument: 11Videner v. Arco Oil & Gas
up about $3.5 million for the settlement. Leibovitz          Co.. 717 F.Supp. 1211 (N.D.Tex.l989), and Ganske
conceded that he breached the agreement. When asked          v. WRS Group. Inc.. No. l0--··06·····00050--CV, 2007
what he thought the amount of damages he should pay          \VL 1147357 (Tex.App.-Waco Apr. 18, 2007, no
as a consequence of his breaches of the Agreement,           pet.)(mem.op). 14 Those cases conclude that in a suit




Giant Eagle's Letter Brief                                                                                               Page 90

                                                                                                                         R458
Leibovitz v. Sequoia Real Estate Holdings, L.P., --- S.W.3d ---- (2015)


involving breach and enforcement of a settlement            In the eleventh issue, appellants contend Holdings
agreement that sought to bring an end to litigation or      is not entitled to attorney's fees against SFS 23
prevent future litigation, the attorney's fees incurred     because Holdings did not establish the elements
by the non-breaching party in enforcing the settlement      for a permanent injunction against SFS 23. This
agreement are damages for the breach because they are       issue depends upon our sustaining appellants' sixth
a foreseeable consequence of the breach. See Widener,       through ninth issues. However, because we overruled
717 F. Supp. at 1217 ("Because the purpose of entering      those issues and concluded Holdings established the
into a release is to avoid litigation, the damages a        elements for a permanent injunction against SFS 23,
releaser suffers when the release is breached are its       we overrule appellants' eleventh issue.
costs and attorneys' fees incurred in defending against
the wrongfully brought action."); Ganske. 2007 WL           In the twelfth and thirteenth issues, appellants contend
114 73 57, at *3 ("In an action for breach of contract,     the trial court erred by awarding attorney's fees
actual damages may be recovered when the loss is            against SFS 23 "because the permanent injunction
the 'natural, probable, and foreseeable consequence         against [SFS 23] must be reversed,""the jury failed
of defendant's conduct.' The prior attorney's fees are      to find damages [against SFS 23]," and Holdings
such consequences of the breach."(quoting J\1(;'ad v.       "failed to plead and prove SFS 23 was jointly and
Johnson 01p., Inc., 615 S.\V.2d 685,687 (Tex.198l ))).      severally liable." We have overruled appellants' issues
Those cases did not hold that benefit of the bargain        challenging the enforceability of the injunction. The
cannot be an appropriate measure of damages for             arguments about the jury failing to find damages
breach of a settlement agreement. Appellants cite no        against SFS 23 concern appellants' argument that
cases concluding that Holdings' damages could not be        Holdings is not entitled to attorney's fees under section
measured by the benefit of the bargain.                     38.00 l of the Texas Civil Practice and Remedies
                                                            Code. SeeTEX. CIV. PRAC. & REM.CODE ANN.
Appellants also contend the trial court erred by            § 38.001(8) (West 2015). However, we need not
submitting the jury question based on the benefit-of-       consider those arguments because the Agreement
the-bargain measure because there was no evidence of        provided for attorney's fees.
that measure of damages. Appellants did not object to
the jury charge on that ground. Accordingly, they have       *17 [381 The Agreement contained a paragraph
waived any error on that ground. SeeTEX.R. CIV. P.          describing the procedures for any future litigation
274 ("Any complaint as to a question, definition, or        related to the Agreement. It stated that any
instruction, on account of any defect, omission, or fault   dispute, claim, or controversy concerning breach or
in pleading, is waived unless specifically included in      enforcement of the Agreement would be resolved
the objections.").                                          through arbitration in Dallas. The paragraph described
                                                            the method for selecting the panel of arbitrators and
We conclude appellants have not shown the trial court       then described the method of allocating costs and
abused its discretion. We overrule appellants' tenth        attorney's fees incurred in the litigation:
issue.
                                                                        The       substantially     non-
                                                                        prevailing party (as determined
                                                                        by the arbitration panel after
                ATTORNEY'S FEES                                         determining the relative success
                                                                        of the parties, including the
In their eleventh, twelfth, and thirteenth issues,
                                                                        successful assertion of any
appellants contend the trial court abused its discretion
                                                                        defense) shall bear any fees
by awarding Holdings its attorney's fees against SFS
                                                                        and expenses of the arbitrators,
23. In Texas, attorney's fees are not recoverable from
                                                                        other    tribunal    fees    and
an opposing party unless authorized by statute or
                                                                        expenses, reasonable attorneys'
contract. Tucker v. Tfwmas, 419 S. W .3d 292, 295
                                                                        fees of both parties, any costs
(Tex.20 13).
                                                                        of producing witnesses and
                                                                        any other reasonable costs or



Giant Eagle's Letter Brief                                                                                              Page 91

                                                                                                                        R459
Leibovitz v. Sequoia Real Estate Holdings, L.P., --- S.W.3d ---- (2015)


                                                            Holdings obtained a permanent injunction against both
            expenses incurred by him or the
            substantially prevailing party.                 Leibovitz and SFS 23 to enforce the provisions of the
                                                            Agreement prohibiting appellants from filing claims
Because neither side demanded arbitration, the parties      against and disparaging other parties to the Agreement,
waived their right to have the dispute determined           including contacting the investors in other Sequoia
by an arbitration panel, and the parties elected to         investments and making derogatory allegations about
proceed in traditional litigation before a trial court      Holdings. We conclude appellants have not shown the
and jury. Regardless of whether the adjudicator was         trial court erred by awarding Holdings its attorney's
an arbitration panel or a trial court, it appears the       fees against SFS 23. We overrule appellants' twelfth
intent of the parties as expressed in the Agreement         and thirteenth issues.
was that the "substantially non-prevailing party" pay
the substantially prevailing party's attorney's fees.
SeeCoker v. Coker. 650 S.W.2d 391, 393 (Tex.l983)
                                                                                CONCLUSION
("In construing a written contract, the primary concern
of the court is to ascertain the true intentions of the     We affirm the trial court's judgment.
parties as expressed in the instrument.").

In this case, Holdings was clearly the substantially         All Citations
prevailing party against both appellants. Although
                                                            --- S.W.3d ----, 2015 WL 3451675
Holdings did not recover any damages from SFS
23 and only minimal damages from Leibovitz,


Footnotes
1     The Han. Michael J. O'Neill, Justice, Court of Appeals, Fifth District of Texas at Dallas, Retired, sitting by
      assignment.
2     All of the investment offerings created or overseen by Behunin and mentioned in the record included the
      word "Sequoia" in the name. Thus, the investment offering concerning the Frankford Springs apartment
      complex was called "Sequoia Frankford Springs." Likewise, all of the entities involved in the ownership or
      management of the investments also included the word "Sequoia" in their names.
3     The Private Placement Memorandum required that each investor "have such knowledge and experience
      in financial and business matters that you are capable of evaluating the merits and risks of an investment
      in an Interest and have the ability to protect your own interests in connection with such investment." Each
      investor also had to qualify as an "accredited investor" under the Securities Act of 1933 by being (1) "a
      natural person who had had individual income in excess of $200,000 in each of the two most recent years,
      or joint income with your spouse in excess of $300,000 in each of these years, and have a reasonable
      expectation of reaching the same income level in the current year;" (2) "a natural person and your individual
      net worth, or joint net worth with your spouse, exceeds $1,000,000 at the time you purchase the Interests;"
      or (3) "an entity ... in which each equity owner is an accredited investor." See17 C.F.R. § 230.215(e), (f), (h)
      (codification of rule 501 of Regulation D defining "accredited investor'').
4     Besides managing the investment offering, Behunin was also a tenant in common in the investment. As part
      of the settlement, Behunin transferred about twenty-five percent of his investment (valued by Behunin at
      about $282,000) to the other investors. This transfer increased Leibovitz's percentage of ownership from
      3.118 percent to 3.197 percent.
5     Behunin revealed how remaining investment funds were pooled in Holdings. Behunin's statements were
      part of his testimony in bankruptcy court in 2011 concerning the bankruptcy of another Sequoia tenancy-
      in-common investment.
6     Behunin testified that he and the Sequoia entities he controlled assigned their claims against appellants to
      Holdings.
7     The agreement defined "Owners" as meaning all the limited partnerships that owned an interest in the
      property, including SFS 23, and the partnerships' general partners, including Leibovitz and his wife. "Parties"
      was defined as including the Owners, "Sequoia" (which was defined as including specific Sequoia entities,



                                                                             Government VVorks.                          23
Giant Eagle's Letter Brief                                                                                                    Page 92

                                                                                                                              R460
Leibovitz v. Sequoia Real Estate Holdings, L.P., --- S.W.3d ---- (2015)


      including Holdings, and their owners, officers, directors, employees, etc.), and Behunin. Thus, appellants
      were both "Owners" and "Parties" as defined in the agreement.
8     Part of the difficulty of interpreting the meaning of the language arises from the fact that the supreme court
      set forth the factors in Forest Oil Corp. but did not expressly apply them.
9     The Agreement also stated that Eastman was not the attorney for Behunin and his limited partnership that
      was one of the tenants in common in the investment.
10    Appellants assert Holdings committed the offenses of misapplication of fiduciary property over $200,000,
      TEX. PENAL CODE ANN.§ 32.45(c)(7) (West Supp.2014), exploitation of an elderly individual, id. § 32.53,
      and violations of the Texas Securities Act, TEX. REV. CIV. STAT. ANN .. art. 581-29 (West Supp.2014).
11    This case involves a claim of economic duress concerning the subject matter of the Agreement. The alleged
      threat in this case does not involve a threat of physical harm or criminal wrongdoing. Whether actual, physical
      duress, such as a threat of physical harm to a person, could ever be disclaimed in a contract is not before
      us, and we make no determination of that issue. Likewise, we make no determination of whether a threat
      of harm to economic interests with no relation to the Agreement could be disclaimed or whether a threat of
      criminal wrongdoing to the economic interest that is the subject of the contract could be disclaimed.
12    We presume appellants mean there was more than a scintilla of evidence. A mere scintilla of evidence does
      not create a material fact issue and, in legal effect, is no evidence. SeeKindred v. Con/Chem, Inc., 650
      S.W.2d 61, 63 (Tex.1983).
13    Appellants argue that their threatened derogatory statements or disparagement of Holdings to investors
      in other Sequoia investments was not a proper ground for the injunction because Holdings withdrew that
      claim for breach of contract. We disagree. At the conclusion of the first day of the jury trial, the attorney
      for Holdings stated that Holdings was not seeking to prove breach of contract beyond those grounds for
      breach of contract on which the trial court had granted summary judgment for Holdings. Those grounds for
      breach of contract on which the trial court granted summary judgment included "anticipatory repudiation"
      and "disparagement." These grounds appear to include appellants' threat to send a copy of a FINRA claim
      to the investors in other Sequoia investments. Therefore, appellants' argument that this ground was a not
      proper ground for the injunction because Holdings waived it lacks merit.
14    Appellants also cited a third case, Guffey v. Clark, No. 05-93-00849-CV, 1997 WL 142750 (Tex.App.-
      Dallas Mar. 31, 1997, writ denied) (not designated for publication). Because Guffey was decided before
      January 1, 2003, and was designated "do not publish" under the rules of appellate procedure in effect at that
      time, it has no precedential value. SeeTEX.R.APP. P. 47.7(b). However, like Widener and Ganske, it also
      does not conclude that benefit of the bargain cannot be an appropriate measure of damages for breach of
      a settlement agreement. Guffey, 1997 WL 142750 at "'3-4.


End of Document                                                @ 2015 Thomson Reuters. No claim to original U.S. Government Works.




\lVestlavvNext
Giant Eagle's Letter Brief                                                                                                           Page 93

                                                                                                                                 R461
Tab I
                                         CAUSE NO. DC-15-03853

DICKSON PERRY, derivatively on                             §                 IN THE DISTRICT COURT
behalf of EXCENTUS CORPORATION,                            §
                                                           §
         Plaintiff,                                        §
                                                           §
vs.                                                        §
                                                           §                 DALLAS COUNTY, TEXAS
EXCENTUS CORPORATION,                                      §
BRANDON LOGSDON, JIM MILLS,                                §
GIANT EAGLE, INC., DAVID                                   §
SHAPIRA, DANIEL SHAPIRA, AUTO-                             §
GAS SYSTEMS, INC., RANDY                                   §
NICHOLSON, and                                             §
ALLIANCE DATA SYSTEMS, INC.,                               §
                                                           §
         Defendants,                                       §                68TH JUDICIAL DISTRICT

    MOTION TO STRIKE PLAINTIFF DICKSON PERRY’S SUPPLEMENTAL BRIEF IN
             OPPOSITION TO GIANT EAGLE’S MOTION TO DISMISS

         Defendant Giant Eagle, Inc. (“Giant Eagle”) moves to strike Plaintiff Dickson Perry’s

Supplemental Brief in Opposition to Giant Eagle’s Motion to Dismiss (“Supplemental Brief”).

On August 24, 2015, after the scheduled start time of the hearing on Giant Eagle’s Motion to

Dismiss, Perry electronically filed a Supplemental Brief. Counsel for Mr. Perry referred to this

Supplemental Brief, and the eleven previously-undisclosed cases cited therein, throughout his

argument. Every argument that Perry made in his Supplemental Brief was available to him, and

could have been raised, prior to the briefing deadline of August 19, 2015.1

         This Supplemental Brief was filed contrary to Local Rule 2.09, which provides that

“[e]xcept in case of emergency, briefs, responses and replies relating to a motion (other than for

summary judgment) set for hearing must be served and filed with the Clerk of the Court no

1
  The Supplemental Brief improperly relies on other Defendants’ Responses to Perry’s Requests for Admission in an
attempt to – again – argue that litigation against Giant Eagle in Pittsburgh would be inconvenient. Like every other
argument made in the Supplemental Brief, Perry could have made arguments about these Responses in a timely
Response brief, as they were served on August 14th and 17th, respectively. Moreover, one of these response exhibits
is not legible. See Supp. Br. Ex. 2.

MOTION TO STRIKE PLAINTIFF DICKSON PERRY’S SUPPLEMENTAL BRIEF
IN OPPOSITION TO GIANT EAGLE’S MOTION TO DISMISS                                                             Page 1
{A0948819.2}/252067.docx


                                                                                                               R462
later than three working days before the scheduled hearing.” Dallas County Local Rule 2.09

(emphasis added). Perry did not serve and file this brief at least three days before the hearing.

Counsel did not even provide Giant Eagle with a courtesy copy before or during the hearing.

Only after the hearing, at Defendants’ insistence, did counsel for Perry actually provide a copy.

           For the above reasons, this Court should not consider Perry’s untimely Supplemental

Brief. However, in the event the Court does consider it, the Court should also be aware of

several flaws in Perry’s arguments. First, Perry cites In re Lisa Laser USA, Inc., 310 S.W.3d

880, 883 (Tex. 2010) in an attempt to portray the Texas Supreme Court as applying a “but for”

test when interpreting “arising out of.” That is not what Lisa Laser stands for; rather, the Court

there actually granted mandamus relief from the trial court’s failure to enforce a forum selection

clause and stated that “forum-selection clauses should be given full effect, and subjecting a party

to trial in a forum other than the contractually chosen one amounts to clear harassment ...

injecting inefficiency by enabling forum-shopping, wasting judicial resources, delaying

adjudication on the merits, and skewing settlement dynamics....” Id. (quotations omitted).

           Second, the Supplemental Brief also misrepresents Judge Boyle’s opinion in the First

Texas Case by portraying Judge Boyle as relying on a single case from the Northern District of

Illinois. That is not accurate. Judge Boyle relied on Aerus LLC v. Pro Team, Inc., No. CIV.A. 3-

04-CV-1985M, 2005 WL 1131093, at *1 (N.D. Tex. May 9, 2005), a Texas federal case directly

on point.2 The Texas Supreme Court has expressly stated that it “look[s] to federal law for

guidance in analyzing forum-selection clauses.” In re Int’l Profit Associates, Inc., 274 S.W.3d

672, 677 (Tex. 2009). Moreover, Judge Boyle’s analysis (in addition to being preclusive under

collateral estoppel) is completely in accord with many other courts. See, e.g., Wellogix, Inc. v.


2
    Aerus, and other cases not previously provided to the Court, are attached as Exhibit A.

MOTION TO STRIKE PLAINTIFF DICKSON PERRY’S SUPPLEMENTAL BRIEF
IN OPPOSITION TO GIANT EAGLE’S MOTION TO DISMISS                                              Page 2
{A0948819.2}/252067.docx


                                                                                               R463
SAP Am., Inc., 58 F. Supp. 3d 766, 779 (S.D. Tex. 2014) (finding that where resolution of a

plaintiff’s claims “arguably depends” on construction of an agreement containing a forum

selection clause, “[t]hose claims would therefore also fall within the scope of the forum-selection

clause.”); Interactive Music Tech., LLC v. Roland Corp. U.S., No. CIV.A. 6:07-CV-282, 2008

WL 245142, at *6 (E.D. Tex. Jan. 29, 2008) (“because the resolution of this issue depends on

interpretation of the agreement, the dispute ‘arises out of’ the agreement.”); Laserdynamics Inc.

v. Acer Am. Corp., 209 F.R.D. 388, 391 (S.D. Tex. 2002) (finding that where the “spirit of the …

agreement contemplates the rights and duties of the parties[,] … [i]f any right or obligation in the

… agreement is threatened or impaired by an act of the parties or their privities, that act gives

rise to a dispute under the agreement.”); Skold v. Galderma Labs., L.P., No. CIV.A. 14-5280,

2015 WL 1740032, at *16 (E.D. Pa. Apr. 17, 2015) (forum selection clause applies where

contract forms the “entire business relation” between the parties and “determination of

[planitiff’s] claims implicate the contract’s terms and will require consideration of the contract

and the parties’ respective rights pursuant to the contract.”).

         Third, Perry’s continued complaints about litigation in Pittsburgh being inconvenient are

not relevant. The Texas Supreme Court has held that multi-forum litigation resulting from the

enforcement of a forum selection clause does not constitute the type of “unusual and special

circumstance” that would allow a court to ignore a forum selection clause. See In re Int’l Profit

Associates, Inc., 274 S.W.3d 672, 680 (Tex. 2009) (“[A]ssuming plaintiff’s argument that if the

clauses are enforced, it will have to pursue two suits—one against IPA in Illinois and one against

Salinas in Texas—is correct, that is not the type of unusual and special circumstances that show

litigating in the contracted-for forum will be so gravely difficult and inconvenient [Plaintiff] will

be deprived of its day in court. Litigation over contractual business obligations frequently


MOTION TO STRIKE PLAINTIFF DICKSON PERRY’S SUPPLEMENTAL BRIEF
IN OPPOSITION TO GIANT EAGLE’S MOTION TO DISMISS                                               Page 3
{A0948819.2}/252067.docx


                                                                                                R464
involves more parties than the two principals to the contract. If all it takes to avoid a forum-

selection clause is to join as defendants local residents who are not parties to the agreement, then

forum-selection clauses will be of little value.”); See also In re ADM Investor Servs., Inc., 304

S.W.3d 371, 375 (Tex. 2010) (“The mere existence of another defendant does not compel joint

litigation, even if the claims arise out of the same nucleus of facts.”).

         For the above reasons, the Court should strike Perry’s untimely Supplemental Brief and

grant Giant Eagle’s Motion to Dismiss.

                                                       Respectfully Submitted,


                                                       /s/ Orrin Harrison III
                                                       Orrin L. Harrison III
                                                         Bar No. 09130700
                                                         oharrison@ghetrial.com
                                                       GRUBER HURST ELROD JOHANSEN
                                                       HAIL SHANK, LLP
                                                       1445 Ross Avenue, Suite 2500
                                                       Dallas, TX 75202
                                                       Telephone: 214-855-6828
                                                       Fax: 214-855-6808

                                                                   -and-

                                                       Bernard Marcus
                                                         marcus@marcus-shapira.com
                                                       Scott Livingston
                                                         livingston@marcus-shapira.com
                                                       Jonathan Marcus
                                                         jmarcus@marcus-shapira.com
                                                       MARCUS & SHAPIRA LLP
                                                       301 Grant Street, 35th Floor
                                                       One Oxford Centre
                                                       Pittsburgh, Pennsylvania 15219-6401
                                                       Telephone: 412-338-5200
                                                       Fax: 412-391-8758

                                                       Attorneys for Giant Eagle, Inc., David
                                                       Shapira, and Daniel Shapira


MOTION TO STRIKE PLAINTIFF DICKSON PERRY’S SUPPLEMENTAL BRIEF
IN OPPOSITION TO GIANT EAGLE’S MOTION TO DISMISS                                                Page 4
{A0948819.2}/252067.docx


                                                                                                 R465
                                CERTIFICATE OF SERVICE

       The undersigned certifies that a copy of the foregoing instrument was served upon the
attorneys of record in the above cause via electronic filing and E-mail, in accordance with Rule
21a, Texas Rules of Civil Procedure, on August 25, 2015.


                                                /s/ Orrin L. Harrison III
                                             Orrin L. Harrison III




MOTION TO STRIKE PLAINTIFF DICKSON PERRY’S SUPPLEMENTAL BRIEF
IN OPPOSITION TO GIANT EAGLE’S MOTION TO DISMISS                                          Page 5
{A0948819.2}/252067.docx


                                                                                           R466
                                 Exhibit A




Giant Eagle's Motion to Strike                  Page 6




                                             R467
Aerus LLC v. Pro Team, Inc., Not Reported in F.Supp.2d (2005)
2005 WL 1131093

                                                                   Unauthorized Trademark Reproduction; (4) Infringement of
                                                                   Common Law Trade Dress Rights; and (5) Common Law
                  2005 WL 1131093
                                                                   Unfair Competition. On October 4, 2004, Defendant filed
    Only the Westlaw citation is currently available.
                                                                   its Answer, generally denying Plaintiff's allegations and
             United States District Court,
                                                                   asserting that venue is improper in the Northern District of
             N.D. Texas, Dallas Division.
                                                                   Texas. On December 3, 2004, Defendant filed the subject
                   AERUS LLC, Plaintiff,                           motion.
                         v.
              PRO TEAM, INC., Defendant.
                                                                   II. Analysis
                                                                   Pursuant to 28 U.S.C. § 1406(a), Defendant moves to dismiss
       No. Civ.A. 304CV1985M.          |   May 9, 2005.
                                                                   this case, or to transfer it to the Southern District of California,
Attorneys and Law Firms                                            arguing the parties contractually agreed that the forum for
                                                                   their disputes would be San Diego, California.
John A Dondrea, Douglas Alan Sorensen, Kelly J Kubasta,
Dallas, TX, for Plaintiff.                                         This Court must determine whether an enforceable forum
                                                                   selection clause exists, and if so, what deference should be
Anthony J Dain, Victor M Felix, San Diego, CA, for
                                                                   given to it. Federal law governs the determination of whether
Defendant.
                                                                   an enforceable forum selection clause exists.Haynsworth v.
                                                                   The Corp., 121 F.3d 956, 962 (5th Cir.1997). In this case,
                                                                   the Court must first determine which agreement (and which
        MEMORANDUM OPINION AND ORDER                               corresponding forum selection clause) governs: the 2001
                                                                   Agreement or the 2003 Agreement. The Court will interpret
LYNN, J.
                                                                   these Agreements in accordance with Texas law to decide
 *1 Before the Court is Defendant's Motion to Dismiss, or          which controls. See In re Dengel, 340 F.3d 300, 313 (5th
in the Alternative, to Transfer for Improper Venue, filed on       Cir.2003) (quoting F.D.I.C. v. Firemen's Ins. Co. of Newark,
December 3, 2004. Having considered the motion, response,          N.J., 109 F.3d 1084, 1087 (5th Cir.1997)) (“We look to state
reply and the applicable law, the Court GRANTS in part and         law for rules governing contract interpretation.”).
DENIES in part Defendant's Motion to Dismiss, or in the
Alternative, to Transfer for Improper Venue.
                                                                   A. The Applicable Forum Selection Clause
                                                                   When construing a written contract, it is the court's primary
I. Background                                                      concern “to ascertain the true intent of the parties as expressed
Plaintiff Aerus LLC, formerly doing business as Electrolux, is     in the instrument.”Nat'l Union Fire Ins. Co. of Pittsburgh,
a limited liability company with its principal place of business   Pa. v. CBI Indus., Inc., 907 S.W.2d 517, 520 (Tex.1995);
in Texas. Plaintiff manufactures and distributes cleaning          see also J .M. Davidson, Inc. v. Webster, 128 S.W.3d 223,
equipment. Defendant ProTeam, Inc. is a corporation with           229 (Tex.2003). To the extent possible, provisions should
its main corporate office in Idaho. Defendant develops             be interpreted in a way that gives the entire agreement
and markets floor care products for the janitorial and             effect and “harmonizes potential conflicts between differing
sanitation industry. On July 1, 2001, the parties entered          provisions.”New Concept Constr. Co. v. Kirbyville Consol.
into a Marketing Agreement (“2001 Agreement”), which               Indep. Sch. Dist., 119 S.W.3d 468, 470 (Tex.App.-Beaumont
provided that Defendant would purchase, sell, market,              2003, pet. denied). Parties to a contract are presumed to intend
and distribute Plaintiff's commercial floor care products.         that each provision has meaning, and a clause will not be
The 2001 Agreement also addressed use of Plaintiff's               struck unless an irreconcilable conflict exists. Id. at 469.
trademark and intellectual property. On May 12, 2003,
the parties entered into the Termination, Transition, and           *2 Ambiguity is a question of law for the court to decide.
Release Agreement (“2003 Agreement”), terminating the              CBI Indus., Inc., 907 S.W.2d at 520. In determining whether
2001 Agreement. On September 10, 2004, Plaintiff filed             a contractual provision is ambiguous, the court reviews the
suit against the Defendant, alleging the following claims:         wording in light of surrounding circumstances “in order
(1) Patent Infringement; (2) Breach of Contract; (3)               to ascertain the meaning that would be attached to the


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wording ‘by a reasonably intelligent person acquainted with
all operative usages and knowing all the circumstances prior      The parenthetical at the end of Section 2.1 is not present in
to and contemporaneous with the making of the [contract],         Section 5.13.
other than oral statements by the parties of what they intended
to mean.” ’ Watkins v. Petro-Search, Inc., 689 F.2d 537,          By virtue of Section 5.7 of the 2001 Agreement (“survival
538 (5th Cir.1982) (quoting Sun Oil Co. v. Madeley, 626           clause”), “Sections 4.4, 5.6, and 6 through 20 will survive
S.W.2d 726, 731 (Tex.1981)). If the contract's wording has        any termination or expiration of this Agreement.”One of the
a definite or certain legal meaning, it is not ambiguous. CBI     surviving sections is Section 10, which states, “In the event
Indus., Inc., 907 S.W.2d at 520. Even if an instrument is         [Aerus, LLC] asserts a breach or default by ProTeam under
unambiguous, a trial court may admit extrinsic evidence,          the terms of this Agreement, the jurisdiction, venue, and
such as “parol testimony of the facts and circumstances           applicable law shall be the State of Texas, United States....”
surrounding or pertaining to the making of the agreement,         Plaintiff argues that the forum selection clause in the 2001
in order that the court may apply the language used in the        Agreement is in conflict with the 2003 Agreement. Section
instrument to the facts and circumstances then existing for       5.9 of the 2003 Agreement states:
the purpose of ascertaining the true intention of the parties.”
                                                                               *3 In the event either Party asserts
Templeton v. Dreiss, 961 S.W.2d 645, 657 n. 12 (Tex.App.-
                                                                              a breach or default by the other
San Antonio 1998, pet. denied). If the language of the contract
                                                                              under the terms of this Agreement,
is subject to two or more reasonable interpretations in light
                                                                              the jurisdiction, venue, and applicable
of surrounding circumstances and after applying rules of
                                                                              law shall be [the] City of San Diego,
contract construction, it is ambiguous, and the Court will
                                                                              California, United States of America,
resolve its meaning. See Watkins, 689 F.2d at 538; Webster,
                                                                              and this Agreement shall be deemed
128 S.W.3d at 229; CBI Indus., Inc., 907 S.W.2d at 520.
                                                                              to have been signed at such location
                                                                              to the extent necessary for such
Plaintiff argues that the 2001 and 2003 Agreements'
                                                                              jurisdiction and venue to apply.
provisions relating to venue and jurisdiction are “ambiguous
at best,” and that the forum selection clause therefore is not
mandatory. Two provisions in the 2003 Agreement require           The terms of the 2001 Agreement that allegedly survive
examination. Section 2.1 of the 2003 Agreement states,            termination would render the 2003 Agreement illogical and
                                                                  inconsistent. For example, the dispute resolution and the
            With the sole exception of this                       forum selection clauses in the 2001 and 2003 Agreements are
            Agreement, the Parties acknowledge                    very similar, but they provide for completely different fora
            and agree that any and all written or                 and applicable law. If these provisions in the 2001 Agreement
            oral agreements between the Parties                   were intended to survive termination, then they would render
            related to products or services are                   conflicting provisions in the 2003 Agreement unenforceable.
            hereby terminated and are of no further               Certain of these provisions, which the 2001 Agreement says
            force or effect (except those provisions              survive are nonsensical in light of the 2003 Agreement.
            thereof that, by their terms, survive                 For example, the 2001 Agreement, Section 20, states, “This
            termination ).                                        Agreement, including Schedules attached hereto, contains the
                                                                  entire agreement between the parties as of the date concerning
(emphasis added). Section 5.13 states,                            the subject matter hereof and supercedes [sic] any and all
                                                                  prior agreements.”Similar wording also exists in the 2003
            This Agreement, including all Exhibits
                                                                  Agreement. Both provisions could not logically coexist.
            attached hereto, contains the entire
            agreement between the Parties as of
                                                                  Defendant argues that merger occurred, and therefore, no
            the date concerning the subject matter
                                                                  inconsistency exists. “Merger refers to the absorption of one
            hereof and supercedes [sic] any and
                                                                  contract into another subsequent contract and is largely a
            all prior agreements, oral or written,
                                                                  matter of intention of the parties.”Fish v. Tandy Corp., 948
            between the Parties concerning the
                                                                  S.W.2d 886, 898 (Tex.App.-Fort Worth 1997, writ denied);
            subject matter hereof....
                                                                  see also Superior Laminate & Supply, Inc. v. Formica Corp.,
                                                                  93 S.W.3d 445, 449 (Tex.App.-Houston [14th Dist.] 2002,


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pet. denied). In order for one contract to be merged into          (N.D.Tex. Mar.21, 2002). A party that consents to jurisdiction
another, the parties must be the same in both contracts,           in one forum does not automatically waive its rights to have an
the last contract must address the same subject matter, and        action heard in another. City of New Orleans v. Mun. Admin.
merger must have been intended by the parties. Smith v.            Servs., 376 F.3d 501, 504 (5th Cir.2004). According to the
Smith, 794 S.W.2d 823, 828 (Tex.App.-Dallas 1990, writ             Fifth Circuit, “for a forum selection clause to be exclusive, it
withdrawn).“[A] subsequent integration will not supersede or       must go beyond establishing that a particular forum will have
invalidate a written agreement relating to the same subject        jurisdiction and must clearly demonstrate the parties' intent to
matter if the agreement is such that [it] might naturally be       make that jurisdiction exclusive.”Id. at 504.The court noted,
made as a separate agreement.”Fish, 948 S.W.2d at 899.             “It is important to distinguish between jurisdiction and venue
“However, if the parties to one contract execute another           when interpreting such clauses. Although it is not necessary
whose terms are so inconsistent with the first that they both      for such a clause to use the word ‘venue’ or ‘forum,’ it must do
cannot stand, the first agreement is conclusively presumed         more than establish that one forum will have jurisdiction.”Id.
to have been superseded by the second.”Smith, 794 S.W.2d           A permissive forum selection clause authorizes jurisdiction in
at 828;see also Willeke v. Bailey, 144 Tex. 157, 160, 189          a particular forum, but does not prohibit litigation elsewhere.
S.W.2d 477, 479 (1945); Fish, 948 S.W.2d at 899; Leon              Peavy, 2002 WL 449582, at *1.
Ltd. v. Albuquerque Commons P'ship, 862 S.W.2d 693, 700
(Tex.App.-El Paso 1993, no writ); Montgomery Elevator Co.          A forum selection clause is not necessarily classified as
v. Tarrant County, 604 S.W.2d 363, 367 (Tex.App.-Fort              mandatory or exclusive simply because it contains the
Worth 1980, no writ).“An integration clause is in essence the      word “shall.” Caldas & Sons, Inc. v. Willingham, 17 F.3d
merger doctrine memorialized.”Smith, 794 S.W.2d at 828.            123, 127 (5th Cir.1994) (analyzing Hunt Wesson Foods,
                                                                   Inc. v. Supreme Oil Co., 817 F.2d 75 (9th Cir.1987)). In
The 2003 Agreement includes an integration clause in Section       Hunt, the court explained that, “although the word ‘shall’
5.13, which states, “[t]his Agreement ... contains the entire      is a mandatory term, here it mandates nothing more than
agreement between the Parties as of the date concerning the        that the Orange County courts have jurisdiction.”Id. at
subject matter hereof and supercedes [sic] any and all prior       128 (reviewing a forum selection clause that stated, “the
agreement, oral or written, between the Parties as of the date     laws of the State of California shall govern the validity,
concerning the subject matter hereof ...” The parties explicitly   construction, [and] interpretation ... of this contract. The
set forth their intent that the 2003 Agreement constituted         courts of California, County of Orange, shall have jurisdiction
the entire agreement, and that it superseded any and all           over the parties in any action at law relating to the subject
prior agreements. Any language that survived termination           matter or the interpretation of this contract.”).“[W]here venue
merged into the 2003 Agreement, and to the extent it is            is specified [in a forum selection clause] with mandatory
inconsistent, the 2003 Agreement controls. Thus, the Court         or obligatory language, the clause will be enforced; where
finds that the 2003 Agreement is unambiguous, and its forum        only jurisdiction is specified [in a forum selection clause],
selection clause controls the Court's examination of where         the clause will generally not be enforced unless there is some
venue properly lies for this suit.                                 further language indicating the parties' intent to make venue
                                                                   exclusive.”K & V Scientific Co. v. Bayerische Motoren Werke
                                                                   Aktiengesellschaft, 314 F.3d 494, 499 (10th Cir.2002); see
B. Mandatory Versus Permissive Forum Selection                     also Docksider, 875 F.2d at 764 (“The prevailing rule is clear
Language                                                           from these and other cases that where venue is specified with
 *4 Having determined that the 2003 Agreement controls,            mandatory language[,] the clause will be enforced”).
the Court must determine whether the forum selection clause
in the 2003 Agreement is mandatory (sometimes called                *5 The Plaintiff argues that because in the 2003 Agreement
“exclusive”) or permissive. “Where the agreement contains          the forum selection clause (Section 5.9) and the dispute
clear language showing that jurisdiction is appropriate only in    resolution clause (Section 5.3) provide for two different fora,
a designated forum, the clause is mandatory.”Von Graffenreid       the forum selection clause is not mandatory, and trademark
v. Craig, 246 F.Supp.2d 553, 560 (N.D.Tex.2003) (citing            and confidentiality disputes between the parties can be
Excell, Inc. v. Sterling Boiler & Mech., Inc., 106 F.3d 318,       brought in any court with jurisdiction. The Court disagrees
321 (10th Cir.1997)); Docksider, Ltd. v. Sea Tech., Ltd., 875      with Plaintiff's argument.
F.2d 762, 763-64 (9th Cir.1989); First Nat'l of N. Am., LLC
v. Peavy, No. 3-02-CV-0033-R, 2002 WL 449582, at *1


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In Personal Security & Safety Systems, Inc. v. Motorola Inc.,       377 (5th Cir.2002) (citing RESTATEMENT (SECOND) OF
297 F.3d 388 (5th Cir.2002), the Fifth Circuit distinguished        CONTRACTS § 203(c)). Thus, even if the dispute resolution
between arbitration clauses and forum selection clauses.            and forum selection clauses provide for different fora, the
In Motorola, the Plaintiff argued that the forum selection          forum selection clause applies to claims of breach or default.
clause's specific forum precluded only lawsuits in other
than the designated forum, not arbitration elsewhere. Id. at         *6 Plaintiff argues that the conflicting venue language
395.The court explained that the forum selection clause must        of the forum selection clause and the dispute resolution
be interpreted in the context of the entire agreement. Id. The      clause renders the forum selection clause permissive. Courts
forum selection clause in Motorola was interpreted to mean          have held forum selection provisions permissive when
cases should be litigated in Texas, only when they were not         the language does not prescribe venue nor provide for
subject to arbitration. Id. at 396.The forum selection clause       exclusivity. See Mun. Admin. Servs., Inc., 376 F.3d at
governed “any suit or proceeding,” while the arbitration            504-05 (“The undersigned Contractor does further hereby
clause governed “all disputes or all claims,” evidencing the        consent and yield to the jurisdiction of the State Civil Courts
parties' desire to apply the forum selection clause only when       of the Parish of Orleans ...”); Caldas & Sons, Inc., 17
the dispute was not subject to arbitration. Id. The court further   F.3d at 127-28 (“The laws of the Courts of Zurich are
noted that this was consistent with cases that hold “a forum        applicable.”); Keaty v. Freeport Indonesia, Inc., 503 F.3d
selection clause cannot nullify an arbitration clause unless the    955, 956 (5th Cir.1974) (“This agreement shall be construed
forum selection clause specifically precludes arbitration.”Id.      and enforceable according to the law of the State of New
at n. 11 (citing In re Winter Park Constr., Inc., 30 S.W.3d 576,    York and the parties submit to the jurisdiction of the courts
578 (Tex.App.-Texarkana 2000, no pet.)). In Winter Park,            of New York.”); K & v. Scientific Co., 314 F.3d at 496,
the court held the forum selection clause did not supersede         500 (“Jurisdiction for all and any disputes arising out of or
the arbitration clause, explaining that the forum selection         in connection with this agreement is Munich. All and any
clause simply provided where venue would exist and the law          disputes arising out of or in connection with this agreement
that governed in lawsuits. Id. at 578.“A contractual choice         are subject to the laws of the Federal Republic of Germany.”);
of law provision will not supersede or obviate an arbitration       Watson v. John K. Burch Co., No. 3:02-CV-2555-D, 2003
provision unless the choice of law provision specifically           WL 21145755, at *3 (N.D.Tex. May 14, 2003) (“All lawsuits
excludes arbitration.”Id.                                           will be handled in the State of Michigan.”); Von Graffenreid,
                                                                    246 F.Supp.2d at 557, 561 (“Borrower and each other Loan
In this case, the dispute resolution provision and the              Party hereby consents and agrees that the district court of
forum selection clause apply to different types of disputes.        Dallas County, Texas, or, at Agent's option, the United
According to Section 5.3 of the 2003 Agreement, “Any                States District Court for the Northern District of Texas,
disputes arising under Section 3.7 [Trademarks; Branding] or        Dallas Division, shall have jurisdiction to hear and determine
5.4 [Confidentiality] hereof may be introduced into and heard       any claims or disputes between Borrower and/or any other
by any court having jurisdiction, without any requirement           Loan Party and Agent and/or Guarantors pertaining to this
to comply with the procedures described above in this               Agreement or to any matter arising out of or related to this
Section 5.3.”Section 5.9 provides, “In the event either Party       Agreement.”); Blue Cross & Blue Shield of Tex., Inc. v.
asserts a breach or default by the other under the terms            Dimark Mktg., Inc., No. 3:97-CV-1257-D, 1997 WL 405169,
of this Agreement, the jurisdiction, venue, and applicable          at *1 (N.D.Tex. July 15, 1997) (“each party ‘agrees to’
law shall be [the] City of San Diego, California, United            the jurisdiction of the courts of ‘the Commonwealth of
States of America ...” As in Motorola, the forum selection          Pennsylvania and the Eastern District of the Courts of the
clause in issue here specifically addresses suits for breach        United States.” ’).
or default of the 2003 Agreement. The dispute resolution
provision governs “disputes,” which encompasses an array            On the other hand, courts have held that forum selection
of other conflicts. Therefore, the more general language of         clauses are mandatory and enforceable when they provide for
the dispute resolution clause is not in conflict with the more      exclusivity as to where a case can be brought. See Kevlin
specific language of the forum selection clause. “It is a           Servs., Inc. v. Lexington State Bank, 46 F.3d 13, 14-15
fundamental axiom of contract interpretation that specific          (5th Cir.1995) (emphasis added) (“This contract shall be
provisions control general provisions.”Baton Rouge Oil &            interpreted and construed in accordance with the laws of the
Chem. Workers Union v. ExxonMobil Corp., 289 F.3d 373,              State of Texas. The legal venue of this contract and any



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disputes arising from it shall be settled in Dallas County,       not ambiguous regarding its exclusivity, and was therefore
Texas.”); Docksider Ltd., 875 F.2d at 763-64 (emphasis            mandatory. Dorsey, 2004 WL 2496214, at *4.
added) (“This agreement shall be deemed to be a contract
made under the laws of the State of Virginia, United States       The forum selection clause in this case is similar to the
of America, and for all purposes shall be interpreted in its      clauses in Dorsey and Docksider.The 2003 Agreement
entirety in accordance with the laws of said State. Licensee      forum selection clause states, “the jurisdiction, venue,
hereby agrees and consents to the jurisdiction of the courts of   and applicable law shall be [the] City of San Diego,
the State of Virginia. Venue of any action brought hereunder      California, United States of America ...” This clause
shall be deemed to be in Gloucester County, Virginia.”);          addresses jurisdiction and venue, fixing such in the City of
Klinghoffer v. Mama Fu's Noodle House, Inc., No. 3-04-            San Diego, California. While the clause does not expressly
CV-1695-L, 2004 WL 2583632, at *1, *3 (N.D.Tex. Nov.12,           use the language “exclusively” or “only,” the Court construes
2004) (emphasis added) (“Each party agrees that any legal         it, in context, to be so limited. The specific venue requirement
action or proceeding against the other party that arises out      makes this forum selection clause mandatory and pursuant to
of or is related to this Agreement may only be brought in         it, a lawsuit must be brought in state or federal court in San
the courts of the State of Georgia or of the United States of     Diego, California.
America for the Northern District of Georgia and by entering
into this Agreement each party accepts and consents to the
jurisdiction of the aforesaid courts.”); Dorsey v. N. Life Ins.   C. Applicability of Forum Selection Clause to Claims
Co., No. 04-0342, 2004 WL 2496214, at *1, *4 (E.D.La.             The Court must next determine whether the forum selection
Nov.5, 2004) (emphasis added) (citing Docksider, Ltd., 875        clause applies to the claims asserted in this case. Soil Bldg.
F.2d at 763) (“This Agreement is governed by the laws of          Sys. v. CMI Terex Corp., No. 3:04-CV-0210-G, 2004 WL
the State of Washington. In the event of a lawsuit arising out    1283966, at *4 (N.D.Tex. June 9, 2004); Woolf v. Mary Kay,
of this Agreement, the Executive General Agent agrees that        Inc., 176 F.Supp.2d 642, 647 (N.D.Tex.2001). The court must
venue shall be laid in King County, Washington.”); Marengo        examine the language of the contract to determine which
Films, Inc. v. Koch Int'l LLC, No. 3:03-CV-0369-P, 2003 WL        causes of action are governed by the forum selection clause.
21435728, at *1, *5 (N.D. Tex. June 16, 2003) (emphasis           Marinechance Shipping, Ltd. v. Sebastian, 143 F.3d 216,
added) (“This agreement shall be governed exclusively by          222 (5th Cir.1998); Soil Bldg. Sys., 2004 WL 1283966, at
the laws of the State of New York applicable to contracts         *5. “If the substance of [the plaintiff's] claims, stripped of
made and to be performed entirely in such State. The parties      their labels, does not fall within the scope of the [forum
agree to the exclusive jurisdiction of the Southern District      selection] clause [ ], the clause[ ] cannot apply.”Soil Bldg.
Court of New York, New York.”); Bonded Inspections, Inc. v.       Sys., 2004 WL 1283966, at *4 (quoting Roby v. The Corp.
Northrop Grumman Corp., No. 3:98-CV-0214-D, 1998 WL               of Lloyd's, 996 F.2d 1353, 1361 (2d Cir.1993)) (alteration in
185518, at *1-*2 (N.D.Tex. Apr.10, 1998) (emphasis added)         original).“Claims that arise out of the contractual relationship
(“Exclusive jurisdiction and venue shall lie in the State of      and implicate the agreement are subject to the forum selection
New York, County of Nassau, including the United States           clause.”Kessmann & Assoc., Inc. v. Barton-Aschman Assoc.,
Federal Courts therein.”).                                        Inc., 10 F.Supp.2d 682, 688 (S.D.Tex.1997); see also Tex.
                                                                  Source Group, Inc. v. CCH, Inc., 967 F.Supp. 234, 238
 *7 In Docksider, the Ninth Circuit distinguished its earlier     (S.D.Tex.1997); Hoffman v. Burroughs Corp., 571 F.Supp.
decision in Hunt (in which the court held the forum selection     545, 547 (N.D.Tex.1982). In other words,
clause was permissive) by explaining that the forum selection
                                                                               the precise issue before this Court
clause at issue specifically prescribed venue. Docksider,
                                                                               is whether the facts and claims
Ltd., 875 F.2d at 763. The Ninth Circuit explained that
                                                                               alleged in the ... complaint have a
the clause required enforcement because the parties not
                                                                               direct or indirect connection, link or
only consented to jurisdiction in Virginia, but agreed to
                                                                               association with, or relation to (1) the
mandatory venue in Virginia. Id.“This mandatory language
                                                                               contractual relationship evidenced by
makes clear that venue, the place of suit, lies exclusively
                                                                               the ... Agreement; (2) an interpretation
in the designated county.”Id. In Dorsey, the court held the
                                                                               of the ... Agreement; (3) the facts that
explicit venue language in the forum selection clause was
                                                                               would support a breach of contract
                                                                               action based on the ... Agreement;


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             or (4) the subject matter of the ...                  LEXIS 4074, at *37. Therefore, the forum selection clause is
             Agreement. In arriving at its decision,               applicable to this claim.
             the Court, taking the allegations in
             the ... complaint as true and resolving
             factual conflicts in the documentary                  2. Counts II & III-Breach of Contract & Unauthorized
             submissions in favor of the plaintiff,                Trademark Reproduction in Violation of the Lanham
             looks to whether a connection, link,                  Act
             association with or relation to the ...               Because the Plaintiff asserts the same argument for both of
             Agreement, exists by reason of an                     these claims, the Court considers them together. Plaintiff
             established or discoverable relation.                 argues the forum selection clause does not apply to the
                                                                   breach of contract claim because the breach asserted involves
 *8 Smith v. Lucent Techs., Inc., No. 02-0481, 2004 U.S.           use of licensed marks and confidentiality. Plaintiff further
Dist. LEXIS 4074, at *37 (E.D.La., Mar. 16, 2004). If such a       states that such subject matter is expressly allowed to “be
connection is found between the claims at issue and the 2003       introduced into and heard by any court having jurisdiction,”
Agreement, the forum selection clause applies.                     pursuant to Section 5.3 of the 2003 Agreement. In addition,
                                                                   Plaintiff asserts that the breach related to Plaintiff's licensed
The Plaintiff argues the forum selection clause does not apply     marks falls under Section 7 [Intellectual Property] of the
to any of its claims. It is asserting the following claims: (1)    2001 Agreement, and that Texas is the proper venue and
Count I-Patent Infringement; (2) Count II-Breach of Contract;      jurisdiction to bring such a claim under Section 10 [Forum
(3) Count III-Unauthorized Trademark Reproduction in               Selection] of the 2001 Agreement, and both Sections survive
Violation of the Lanham Act; (4) Count IV-Infringement of          termination according to the Survival Clause, Section 5.7
Common Law Trade Dress Rights; and (5) Count V-Common              of the 2001 Agreement. Plaintiff makes a similar argument
Law Unfair Competition. The relevant language at issue from        regarding the Lanham Act claim.
the 2003 Agreement forum selection clause is, “In the event
either Party asserts a breach or default by the other under         *9 The forum selection clause specifically addresses breach
the terms of this Agreement, the jurisdiction, venue, and          or default under the 2003 Agreement. The breach of contract
applicable law shall be [the] City of San Diego, California ...”   and Lanham Act claims fall within the purview of the
                                                                   2003 Agreement's forum selection clause because the 2003
                                                                   Agreement must be interpreted to determine whether the
1. Count I-Patent Infringement                                     Defendant violated such rights of the Plaintiff, or whether it
Plaintiff argues that resolution of the Patent Infringement        was acting in accordance with the Agreement. In addition,
claim does not depend on interpretation of either the 2001         the 2003 Agreement is the controlling agreement as explained
Agreement or the 2003 Agreement. Plaintiff explains that           above. Thus, the forum selection clause is applicable with
because the contracts do not explicitly address patents            regard to both claims.
or patent infringement, the forum selection clause is
inapplicable to such a claim. Defendant argues that the 2003
Agreement authorized it to manufacture and sell Plaintiff's        3. Count IV-Infringement of Common Law Trade Dress
products embodying inventions in the patent at issue, without      Rights
a time limit to market and sell such products. Thus, one of        Plaintiff argues that because trade dress rights are another
the Defendant's defenses to the patent infringement claim is       form of trademark rights, and trademark claims can
based on the 2003 Agreement. “If enforcement of a provision        be brought in any jurisdiction pursuant to Section 3.7
in the [Agreement] is ... a defense to a claim, that claim         [Trademarks; Branding] of the 2003 Agreement, the forum
involves a right or remedy under the contract and should           selection clause does not apply. As explained above regarding
fall within the scope of the forum selection clause.”Penn,         the Lanham Act claim, interpretation of the 2003 Agreement
L.L.C. v. New Edge Network, Inc., No. 03 C 5496, 2003 U.S.         is necessary to determine whether the Defendant violated the
Dist. LEXIS 17664, at *7 (N.D.Ill. Oct. 1, 2003). Thus, the        Plaintiff's trademark rights. Therefore, the forum selection
Court finds that the allegations in this claim have a “direct or   clause applies to this claim.
indirect connection, link or association with, or relation to”
the 2003 Agreement. See Lucent Techs., Inc.,2004 U.S. Dist.
                                                                   4. Count V-Common Law Unfair Competition



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Plaintiff argues that Defendant “unfairly competed                                unfairness of the chosen law will
by infringing [Plaintiff's] common law trade dress                                deprive the plaintiff of a remedy; or
rights.”Plaintiff further states that this claim falls under                      (4) enforcement of the forum selection
Section 3.7 [Trademarks; Branding] of the 2003 Agreement,                         clause would contravene a strong
and can be brought in “any court having jurisdiction,” since                      public policy of the forum state.
the forum selection clause does not apply. To determine
whether Defendant violated Plaintiff's trade dress rights,           Haynsworth, 121 F.3d at 963. However, the party seeking to
interpretation of the contract is necessary. If no violation         avoid enforcement of the forum selection clause bears a heavy
occurred, then no unfair competition occurred. Because               burden of proof.Id.“Where the contract contains a valid forum
interpretation of the contract is necessary to determine if such     selection clause, dismissal rather than transfer is appropriate
claim can stand, the forum selection clause applies to this          if the case is filed in the wrong district.”Von Graffenreid,
claim.                                                               246 F.Supp.2d at 562 (citing Amplicon, 77 F.3d at 115). The
                                                                     Fifth Circuit has upheld dismissal as an appropriate means
                                                                     of enforcement of a forum selection clause. Amplicon, Inc.,
D. Deference                                                         77 F.3d at 114. The Plaintiff does not specifically address
The Court must next determine the amount of deference                whether the forum selection clause is unreasonable. Rather,
to be given to the forum selection clause. The amount of             the Plaintiff only sets forth reasons why the case should not
deference a court should give to a forum selection clause is         be transferred pursuant to the “interest of justice” balancing
determined by whether the Defendant has requested dismissal          of 28 U.S.C. § 1404(a).
for improper venue under 28 U.S.C. § 1406(a) or requested
transfer under § 1404(a).See Int'l Software Sys., Inc. v.            A transfer for improper venue falls under § 1406(a).Jackson
Amplicon, Inc., 77 F.3d 112, 115-16 (5th Cir.1996); Pugh v.          v. W. Telemarketing Corp. Outbound, 245 F.3d 518, 523
Arrow Elecs., Inc., 304 F.Supp.2d 890, 893 (N.D.Tex.2003);           (5th Cir.2001); Soil Bldg. Sys., 2004 WL 1283966, at *6.
Von Graffenreid, 246 F.Supp.2d at 561; Beauticontrol, Inc.           The court has broad discretion in determining whether to
v. Burditt, No. 3:01-CV-0744-M, 2001 WL 1149360, at                  dismiss or transfer a case in the interest of justice under 28
*2 (N.D.Tex. Sept.26, 2001). In this case, the Defendant             U.S.C. § 1406(a).Soil Bldg. Sys., 2004 WL 1283966, at *6.
has moved to dismiss, or in the alternative, to transfer for         “[I]n considering a defendant's motion to transfer, courts in
improper venue pursuant to § 1406(a).28 U.S.C. § 1406(a)             this circuit should use an ‘interest of justice’ balancing test
states, “The district court of a district in which is filed a case   based on § 1404 and § 1406 in which the forum selection
laying venue in the wrong division or district shall dismiss,        clause is only one consideration among many, whereas with
or if it be in the interest of justice, transfer such case to any    a motion to dismiss, a court should presume that the clause
district or division in which it could have been brought.”           is valid unless a defendant proves fraud or overreaching in
                                                                     relation to the clause itself.”Beauticontrol, Inc., 2001 WL
Where a party seeks dismissal under § 1406(a), the forum             1149360, at *5. The court should look at convenience of the
selection clause is “prima facie valid and should be enforced        forum given the parties' expressed preference in the forum
unless enforcement is shown by the resisting party to                selection clause, the fairness of transferring the case in light
be unreasonable under the circumstances.”M/S Bremen v.               of the forum selection clause, and the relative bargaining
Zapata Off-Shore Co., 407 U.S. 1, 10, 92 S.Ct. 1907, 32              power of the parties. Id. at *6 The court should also weigh
L.Ed.2d 513 (1972). Enforcement may be “unreasonable”                the convenience of the witnesses and “those public-interest
when:                                                                factors of systemic integrity and fairness that, in addition to
                                                                     private concerns, come under the heading of ‘the interest of
              *10 (1) the incorporation of the                       justice.” ’ Id. (quoting Stewart Org., Inc. v. Ricoh Corp.,
             forum selection clause into the                         487 U.S. 22, 30, 108 S.Ct. 2239, 101 L.Ed.2d 22 (1988)). In
             agreement was the product of fraud                      most cases, the movant bears the burden of proving transfer
             or overreaching; (2) the party seeking                  is appropriate. Watson, 2003 WL 21145744, at *4. However,
             to escape enforcement will for all                      “the presence of a valid and enforceable forum selection
             practical purposes be deprived of his                   clause shifts the burden of persuasion to the nonmovant who
             day in court because of the grave                       is attempting to avoid enforcement.” Id.
             inconvenience or unfairness of the
             selected forum; (3) the fundamental


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Aerus LLC v. Pro Team, Inc., Not Reported in F.Supp.2d (2005)
2005 WL 1131093

Defendant argues that the parties' expressed preference in
the 2003 Agreement was San Diego, California. Defendant                In analyzing the interest of justice factors, the Court agrees
avers Plaintiff has the burden of persuading the Court why             with the Defendant. In the 2003 Agreement, both parties
the forum selection clause should not be enforced. It explains         contractually agreed to choose San Diego, California, as the
that Plaintiff is “a sophisticated business entity that has been       forum. Plaintiff's concerns should have been raised at the time
                                                                       of drafting the forum selection provision, not after the fact.
in business for nearly 80 years, has over 500 franchise-
owned centers throughout the United States and Canada,                 Both parties were represented by attorneys, and there is no
                                                                       evidence of any unequal bargaining power. It is not unfair or
and has sold products or services to nearly 50 million
households and businesses.”In addition, the 2003 Agreement             unreasonable to enforce a forum selection provision to which
                                                                       both parties contractually agreed to be bound.
was executed in San Diego, California, and California law
is applicable in interpretation of the contract. Defendant also
                                                                       This Court will enforce the contract's forum selection clause.
argues both parties were represented by counsel in drafting
this agreement. Therefore, Defendant asserts the case should           Because the forum selection clause mandates the case be filed
                                                                       in San Diego, California, venue in this Court is “wrong.”
be transferred to San Diego, California.
                                                                       However, as transfer is an appropriate means under § 1406
 *11 Using the interest of justice analysis, and considering           to enforce the forum selection clause when a case is filed in
                                                                       the wrong district, this Court transfers the case to the United
the convenience of the parties, and witnesses the Plaintiff
                                                                       States District Court for Southern District of California,
suggests the Northern District of Texas is the appropriate
venue. Plaintiff's headquarters are in Dallas, Texas, and              located in San Diego, California. See28 U.S.C. § 1406(a)
                                                                       (2005).
Plaintiff's representatives would have to travel over 1,000
miles to San Diego, California. Plaintiff also argues its
“officers and key employees are located in Dallas, Texas,”
                                                                       III. Conclusion
“most, if not all” documents related to Plaintiff's claims are         For the reasons stated above, the Defendant's Motion to
located in Dallas, no relevant documents or witnesses are              Dismiss is DENIED and Defendant's Motion to Transfer
located in San Diego, it would significantly burden resources          Venue is GRANTED.
of the company to travel to San Diego for court appearances,
and Plaintiff would have to retain local counsel in California.        SO ORDERED.
Additionally, Plaintiff argues whether venue is in San Diego
or Dallas, Defendant will still have to travel over 1,000 miles.
Defendant will have to retain local counsel in either city,            All Citations
Defendant does not have a sales representative in either city,
and Defendant has a comparable number of warranty centers              Not Reported in F.Supp.2d, 2005 WL 1131093
in both cities. Thus, Plaintiff asserts there is no reason to
override its choice of forum in Dallas.

End of Document                                                    © 2015 Thomson Reuters. No claim to original U.S. Government Works.




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Wellogix, Inc. v. SAP America, Inc., 58 F.Supp.3d 766 (2014)


                                                                     pursuant to a forum-selection clause pointing to
                                                                     a state or foreign forum.
                   58 F.Supp.3d 766
              United States District Court,                          Cases that cite this headnote
                      S.D. Texas,
                   Houston Division.
                                                               [2]   Federal Courts
               WELLOGIX, INC., Plaintiff,                                Forum Non Conveniens
                       v.                                            Federal Courts
        SAP AMERICA, INC., et al., Defendants.                           Discretion in general
                                                                     The doctrine of forum non conveniens enables
                Civil Action No. H–14–
                                                                     a district court, at its discretion, to decline
            741. | Signed Nov. 10, 2014.
                                                                     to exercise jurisdiction if the moving party
Synopsis                                                             establishes that the convenience of the parties
Background: Competitor of software production company                and the court and the interests of justice indicate
sought declaration of noninfringement of company's patents.          that the case should be tried in another forum.
Production company counterclaimed under state law for
                                                                     Cases that cite this headnote
misappropriation of trade secrets obtained during course
of work performed pursuant to cooperation agreement.
Following severance of counterclaims, competitor moved for     [3]   Federal Courts
summary judgment.                                                        Forum Non Conveniens
                                                                     Federal Courts
                                                                          Convenience of parties and witnesses;
Holdings: The District Court, Sim Lake, J., held that:               location of evidence
                                                                     The ultimate inquiry in a forum non conveniens
[1] competitor did not waive forum selection clause in               analysis is where trial will best serve the
agreement;                                                           convenience of the parties and the ends of justice.

                                                                     Cases that cite this headnote
[2] misappropriation claims were within scope of forum
selection clause;
                                                               [4]   Contracts
[3] forum selection clause was enforceable;                              Legal remedies and proceedings
                                                                     For purposes of forum non conveniens
[4] dismissal for forum non conveniens was merited; and              analysis, because a valid forum-selection clause
                                                                     represents the parties' agreement as to the most
[5] Germany was adequate and available forum.                        proper forum and the overarching consideration
                                                                     is whether dismissal would promote the interest
                                                                     of justice, a valid forum-selection clause should
Motion granted.
                                                                     be given controlling weight in all but the most
                                                                     exceptional cases.

 West Headnotes (34)                                                 Cases that cite this headnote


                                                               [5]   Contracts
 [1]    Federal Courts
                                                                         Legal remedies and proceedings
            Forum non conveniens
                                                                     Competitor that allegedly misappropriated trade
        A federal court applies the federal law of forum
                                                                     secrets from a software production company
        non conveniens in deciding a motion to dismiss
                                                                     during course of cooperation agreement did not



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Wellogix, Inc. v. SAP America, Inc., 58 F.Supp.3d 766 (2014)


        waive right to enforce forum selection clause                 necessary to a final judgment, and (4) reviewed
        by filing declaratory action in Texas, where                  under the same standard as the present issue.
        there was no indication that competitor intended
        to waive that right, and competitor did not                   Cases that cite this headnote
        substantially invoke judicial process in Texas to
        production company's detriment.                        [10]   Contracts
                                                                          Legal remedies and proceedings
        Cases that cite this headnote
                                                                      Software production company's state law
                                                                      misappropriation of trade secret claims were
 [6]    Federal Courts                                                within the scope of forum selection clause
            Agreement as to place of bringing suit;                   contained in cooperation agreement with
        forum selection clauses                                       competitor; dispute arose out of agreement, since
        The enforceability of a forum-selection clause                its resolution arguably depended on construction
        in federal court is governed by federal law,                  of confidentiality language in the agreement.
        regardless of the basis for federal jurisdiction.
                                                                      Cases that cite this headnote
        Cases that cite this headnote

                                                               [11]   Contracts
 [7]    Contracts                                                         Legal remedies and proceedings
            Legal remedies and proceedings                            To determine whether a claim falls within the
        Before a court can consider enforcing a forum-                scope of a forum-selection clause, a court looks
        selection clause, it must first determine whether             to the language of the contract.
        the clause applies to the type of claims asserted
        in the lawsuit.                                               Cases that cite this headnote

        Cases that cite this headnote
                                                               [12]   Contracts
                                                                          Legal remedies and proceedings
 [8]    Judgment                                                      As with the potential waiver of a forum-selection
            Essentials of Adjudication                                clause, a threshold issue in determining whether
        Once a court has decided an issue of fact or                  a claim falls within the scope of that clause is
        law necessary to its judgment in a case, the                  what law to apply.
        doctrine of collateral estoppel precludes parties
        from relitigating that issue in a subsequent case             Cases that cite this headnote
        involving a party to the first.
                                                               [13]   Contracts
        Cases that cite this headnote
                                                                          Legal remedies and proceedings
                                                                      The scope of a forum-selection clause is not
 [9]    Judgment                                                      limited solely to claims for breach of the contract
            Identity of Issues, in General                            that contains it.
        Judgment
            Matters actually litigated and determined                 Cases that cite this headnote

        Judgment
            Essentials of Adjudication                         [14]   Contracts
        Collateral estoppel applies when a previously                     Legal remedies and proceedings
        litigated issue of law or fact was: (1) identical             In a forum-selection clause, the term “arising”
        to the present issue, (2) actually litigated, (3)             is generally interpreted as indicating a causal
                                                                      connection; thus, clauses that extend only to



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        disputes “arising out of” a contract are construed            must clearly demonstrate the parties' intent to
        narrowly, while clauses extending to disputes                 make that jurisdiction exclusive; therefore, to be
        that “relate to” or “are connected with” the                  enforceable, a forum-selection clause must be
        contract are construed broadly.                               mandatory, not just permissive.

        Cases that cite this headnote                                 Cases that cite this headnote


 [15]   Contracts                                              [19]   Contracts
            Legal remedies and proceedings                                Agreement as to place of bringing suit;
        In determining whether a claim falls within the               forum selection clauses
        scope of a forum selection clause, the phrase                 Forum selection clause in cooperation agreement
        “arising in connection with” has been found to                between two software production company and
        reach every dispute between the parties having                competitor was enforceable absent showing that
        a significant relationship to the contract and all            it was unreasonable or exceptional.
        disputes having their origin or genesis in the
        contract; such a clause encompasses not only                  Cases that cite this headnote
        contract claims, but also statutory and common
        law trade secrets claims in connection with the        [20]   Contracts
        agreement.                                                        Agreement as to place of bringing suit;
                                                                      forum selection clauses
        Cases that cite this headnote
                                                                      To show that a forum-selection clause is
                                                                      unreasonable, the resisting party must prove: (1)
 [16]   Contracts                                                     the incorporation of the forum-selection clause
            Legal remedies and proceedings                            into the agreement was the product of fraud or
        All disputes the resolution of which arguably                 overreaching; (2) the party seeking to escape
        depend on the construction of the agreement                   enforcement will for all practical purposes be
        arise out of that agreement for purposes of a                 deprived of his day in court because of the
        forum-selection clause.                                       grave inconvenience or unfairness of the selected
                                                                      forum; (3) the fundamental unfairness of the
        Cases that cite this headnote                                 chosen law will deprive the plaintiff of a remedy;
                                                                      or (4) enforcement of the forum selection clause
 [17]   Contracts                                                     would contravene a strong public policy of the
            Legal remedies and proceedings                            forum state.
        Federal Courts                                                Cases that cite this headnote
            Waiver, estoppel, and consent
        For purposes of a forum selection clause's
                                                               [21]   Contracts
        exclusivity, a party's consent to jurisdiction in
                                                                          Legal remedies and proceedings
        one forum does not necessarily waive its right to
        have an action heard in another.                              Forum-selection clauses must be given
                                                                      controlling weight in all but the most exceptional
        Cases that cite this headnote                                 cases, because in all but the most unusual cases
                                                                      the interest of justice is served by holding parties
                                                                      to their bargain.
 [18]   Contracts
            Legal remedies and proceedings                            Cases that cite this headnote
        For a forum selection clause to be exclusive,
        it must go beyond establishing that a
                                                               [22]   Federal Courts
        particular forum will have jurisdiction and
                                                                          Denial, dismissal, or transfer


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Wellogix, Inc. v. SAP America, Inc., 58 F.Supp.3d 766 (2014)


        Dismissal of software production company's                    misappropriation of trade secrets claims against
        state law misappropriation of trade secret claims             a competitor with which it had entered
        against competitor with which it had entered                  into a cooperation agreement; absent good
        into a cooperation agreement for forum non                    faith showing to the contrary, court would
        conveniens was merited, where forum selection                 assume that competitor would consent to
        clause in agreement provided for Germany as                   jurisdiction provided in forum selection clause of
        the appropriate jurisdiction, private factors of the          cooperation agreement.
        forum non conveniens analysis were irrelevant,
        public factors were insufficient to overcome the              Cases that cite this headnote
        parties' agreement, and the case was not so
        unusual as to overcome forum selection clause.         [26]   Federal Courts
                                                                          Availability and adequacy
        Cases that cite this headnote
                                                                      For purposes of forum non conveniens analysis,
                                                                      an alternative forum is available when the
 [23]   Contracts                                                     entire case and all parties can come within the
            Agreement as to place of bringing suit;                   jurisdiction of that forum.
        forum selection clauses
        Federal Courts                                                Cases that cite this headnote
            Forum non conveniens
        A forum-selection clause that points to a              [27]   Federal Courts
        nonfederal forum must be evaluated under the                      Availability and adequacy
        doctrine of forum non conveniens, including a                 Federal Courts
        balancing-of-interests analysis.                                  Amenability to process

        Cases that cite this headnote                                 For purposes of forum non conveniens analysis,
                                                                      a defendant's submission to the jurisdiction
                                                                      of a foreign forum sufficiently satisfies the
 [24]   Federal Courts                                                availability requirement.
             Public and private interests; balancing
        interests                                                     Cases that cite this headnote
        Federal Courts
            Availability and adequacy                          [28]   Federal Courts
        The traditional forum non conveniens analysis                     Amenability to process
        comprises a two-step inquiry: first, the court                To dismiss a case for forum non conveniens
        must establish the existence of an alternative                a court must establish that the defendants are
        forum in which the case may be brought that                   amenable to process in the alternative forum.
        is both available and adequate; second, if an
        alternative forum is both available and adequate,             Cases that cite this headnote
        the district court must then weigh various private
        and public interest factors to determine whether       [29]   Federal Courts
        dismissal is warranted.                                           Availability and adequacy
        Cases that cite this headnote                                 For purposes of forum non conveniens analysis,
                                                                      an alternative forum is adequate when the parties
                                                                      will not be deprived of all remedies or treated
 [25]   Federal Courts
                                                                      unfairly, even though they might not enjoy
            Availability and adequacy
                                                                      the same benefits as they might receive in an
        For purposes of forum non conveniens                          American court.
        analysis, Germany was adequate and available
        forum for software production company's


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        Cases that cite this headnote                                  Cases that cite this headnote


 [30]   Federal Courts                                          [34]   Federal Courts
            Presumptions and burden of proof                               Presumptions and burden of proof
        A party moving to dismiss for forum non                        For purposes of a forum non conveniens
        conveniens may rely on a presumption that the                  analysis, the party resisting enforcement of a
        foreign forum is adequate.                                     forum selection clause has the burden of showing
                                                                       that public-interest factors overwhelmingly
        Cases that cite this headnote                                  disfavor dismissal.

                                                                       Cases that cite this headnote
 [31]   Federal Courts
            Presumptions and burden of proof
        Under a forum non conveniens analysis, the
        substantive law of the foreign forum is presumed
                                                               Attorneys and Law Firms
        to be adequate unless the plaintiff makes some
        showing to the contrary, or unless conditions          *769 Richard N. Laminack, Buffy Kay Martines, Thomas
        in the foreign forum made known to the court,          Wayne Pirtle, Laminack Pirtle et al., Thomas C. Wright,
        plainly demonstrate that the plaintiff is highly       Wright & Close LLP, Houston, TX, D. Scott Hemingway,
        unlikely to obtain basic justice there.                Eugenia Simmons Hansen, Hemingway Hansen LLP, Dallas,
                                                               TX, for Plaintiff.
        Cases that cite this headnote
                                                               Joseph T. Jakubek, John D. Vandenberg, Stephen J. Joncus,
 [32]   Federal Courts                                         Klarquist Sparkman, LLP, Portland, OR, How–Ying Albert
            Parties' choice of forum; forum-shopping           Liou, Joseph Beauchamp, Scott W. Cowan, Jones Day,
                                                               Michael Paul Graham, Attorney at Law, Maria Wyckoff
        Federal Courts
                                                               Boyce, Amy Pharr Hefley, Baker Botts LLP, Edward Michael
             Public and private interests; balancing
                                                               Cottrell, First Court of Appeals, Houston, TX, Tharan
        interests
                                                               Gregory Lanier, Jones Day, Palo Alto, CA, for Defendants.
        Because a forum selection clause represents the
        parties' agreement as to the most proper forum,
        the plaintiff's choice of forum merits no weight,
                                                                       MEMORANDUM OPINION AND ORDER
        and a court must deem the private-interest factors
        to weigh entirely in favor of the preselected          SIM LAKE, District Judge.
        forum under forum non conveniens analysis;
        thus a court may only consider arguments about         Plaintiff Wellogix, Inc. (“Wellogix”) brought this trade
        public-interest factors.                               secrets action against SAP AG and SAP America, Inc.
                                                               (collectively “SAP” or “Defendants”). Pending before the
        Cases that cite this headnote                          court is Defendants SAP America, Inc.'s and SAP AG's
                                                               Motion for Summary Judgment (“Motion for Summary
 [33]   Federal Courts                                         Judgment”) (Docket Entry No. 8). For the reasons stated
            Parties' choice of forum; forum-shopping           below, Defendants' Motion for Summary Judgment will be
                                                               granted, and this case will be dismissed.
        Because public interest factors in a forum
        non conveniens analysis will rarely defeat a
        transfer motion, the practical result is that
        forum-selection clauses should control except in                             I. Background
        unusual cases.
                                                               A. Business Relationship




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Wellogix, Inc. v. SAP America, Inc., 58 F.Supp.3d 766 (2014)


Wellogix develops software for the electronic procurement       and Accenture, fraud by SAP, negligent misrepresentation
                                                   1            by SAP, tortious interference with contract and *771
of goods and services by oil and gas operators. This is
commonly referred to as electronic “Purchase *770 to            prospective business relationships by SAP, Accenture, and

Pay” (“P2P”) in the industry. 2 Traditionally, oil and gas      BP, and theft of trade secrets by SAP, Accenture, and BP. 14
companies planned drilling projects using paper records to      Judge Keith B. Ellison presided over the case.

track and pay costs. 3 Around 1998, Wellogix developed
                                                                Wellogix's claims against BP were arbitrated before Judge
software that allowed oil companies to schedule and pay for
                                                                Ellison, who found that BP breached its confidentiality
complex services electronically. 4 According to Wellogix, it    agreement with Wellogix by making Wellogix's confidential
was the only firm offering such software from 2000 to 2005. 5   information accessible to Accenture and SAP. 15 Wellogix's
Wellogix did not offer a standalone solution, however, but
                                                                suit against Accenture proceeded to trial. 16 The jury found
implemented its technology through a series of pilot projects
                                                                for Wellogix, awarding $26.2 million in compensatory
with partner firms. 6
                                                                damages and $68.2 million in punitive damages. 17

SAP, a potential partner, had an existing software solution
                                                                Relevant to the present case, Wellogix's trade secrets claims
providing electronic P2P functionality for the oil and gas
                                                                against the SAP defendants were dismissed pursuant to a
industry, but it lacked the complex services functionality
                                                                forum-selection clause in the NetWeaver Agreement. 18 In
offered by Wellogix. 7 To facilitate integration of third-
                                                                a December 8, 2008, Memorandum and Order (the “2008
party software with its existing solution, SAP developed
                                                                Order”), Judge Ellison held that the clause, which specified
“middleware” software called “NetWeaver.” 8 On March            Frankfurt, Germany, as “[t]he place of jurisdiction for all
15, 2005, Wellogix and SAP entered into the Powered by          disputes arising between the parties out of or in connection
SAP NetWeaver Cooperation Agreement (the “NetWeaver             with [the NetWeaver Agreement],” was mandatory and
Agreement”), which “permitted Wellogix, on a nonexclusive
                                                                enforceable, 19 and that all of Wellogix's claims against
basis, to integrate its software with SAP's software through
                                                                SAP AG and SAP America would have to be decided in
NetWeaver.” 9
                                                                Germany. 20

In May of 2005, SAP and Wellogix pitched their integrated
software to the consulting firm Accenture, which was            C. Patent Declaratory Judgment Action
working on behalf of BP to identify a global software           On April 15, 2010, SAP America filed a Complaint for
provider for BP's operations. 10 “Without notifying Wellogix,   Declaratory Relief against Wellogix, Inc. and Wellogix
Accenture and SAP began developing the complex services         Technology Licensing LLC (the “Declaratory Judgment
component of the global software for BP. As they developed      Action”), which was assigned to the undersigned judge. 21
the component, Accenture and SAP apparently accessed            SAP sought a declaration of noninfringement and invalidity
Wellogix technology ... that had been uploaded to [a
                                                                of five Wellogix patents. 22 In July of 2010, SAP filed inter
                        11
confidential] portal.”     Wellogix alleges that “SAP used      partes requests for reexamination of Wellogix's patents with
these misappropriated trade secrets for its own substantial
                                                                the United States Patent Office (“PTO”). 23 SAP then moved
financial benefit, profiting handsomely from technology it
                                                                to stay the Declaratory Judgment Action pending the outcome
did not develop but which it fully incorporated into its own
                                                                of the PTO reexamination. 24 Wellogix counterclaimed in
products.” 12
                                                                the Declaratory Judgment Action for infringement of the
                                                                same patents. 25 On January 4, 2011, the court stayed the
B. Trade Secrets Litigation and the 2008 Order                  Declaratory Judgment Action, pending reexamination. 26
In May of 2008, Wellogix sued Accenture, BP, and SAP in
Texas state court, and the case was removed to the Southern     At a hearing on March 14, 2014, counsel for all parties
                                       13
District of Texas, Galveston Division. Wellogix asserted        agreed that the patent review process could take an additional
multiple causes of action, including breach of a partnership    six to *772 eighteen months to complete. 27 In order to
agreement by SAP, breach of fiduciary duty by SAP               allow Wellogix to file an amended answer and counterclaims



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alleging theft of trade secrets, the court lifted the stay          Cas. Co., 330 U.S. 518, 67 S.Ct. 828, 834, 91 L.Ed. 1067
and directed Wellogix to file its amended answer and a              (1947). Because a valid forum-select ion clause “represents
motion to sever the trade secrets counterclaims into a new          the parties' agreement as to the most proper forum” and
case. 28 On March 19, 2014, Wellogix filed its amended              the overarching consideration is whether dismissal would
answer and counterclaims for patent infringement and theft          promote the “interest of justice,” a valid forum-selection
                                                                    clause should be given controlling weight “in all but the most
of trade secrets. 29 Wellogix moved to sever its trade secrets
                                                                    exceptional cases.” Atlantic Marine, 134 S.Ct. at 581 (internal
counterclaims, the motion was granted, and on March 21,
                                                                    quotation marks and citations omitted).
2014, the counterclaims were docketed as Civil Case No.
H–14–741. 30 SAP then moved for summary judgment on
Wellogix's trade secrets claims. 31                                 B. SAP has not waived its right to enforce the forum-
                                                                    selection clause.
                                                                     [5] As an initial matter, Wellogix argues that SAP has
                                                                    waived its rights under the forum-selection clause by filing
                           II. Analysis                             the Declaratory Judgment Action in the Southern District of
Wellogix's counterclaims against SAP America, Inc. and SAP          Texas. 34 SAP argues that it has not. 35 The parties have cited
AG allege misappropriation of trade secrets under Texas             a smattering of cases from various federal jurisdictions, but
common law and theft of trade secrets in violation of the           they have ignored a key threshold issue: What law governs a
Texas Penal Code, which is made actionable under the Texas          finding of waiver in this context?
Theft Liability Act (“TTLA”). The common law claim is
nearly identical to the claim that was dismissed by Judge           Wellogix relies on Supreme Court precedent for the “well-
                   32                                               established law that a party waives all of its potential
Ellison in 2008.        The TTLA claim stems from the same
                                                                    objections to a venue with respect to any counterclaims filed
         33
incident. Defendants have moved for summary judgment                by a defendant when it chooses to bring suit in a forum where
on the grounds that Wellogix's claims are barred by claim
                                                                    it could not otherwise be sued.” 36 See Gen. Elec. Co. v.
preclusion and issue preclusion, or, alternatively, that they
                                                                    Marvel Rare Metals, 287 U.S. 430, 53 S.Ct. 202, 204, 77
should be dismissed for forum non conveniens pursuant to
                                                                    L.Ed. 408 (1932). That case held that patent-specific venue
the forum-selection clause in the NetWeaver Agreement.
                                                                    provisions of the Judicial Code did not apply to counterclaims
Because the court is persuaded that Wellogix's counterclaims
                                                                    and, therefore, that a plaintiff who sues on a patent in a district
should be dismissed pursuant to the forum-selection clause
                                                                    in which he would not otherwise be subject to venue consents
and that the relevant portions of Judge Ellison's 2008 Order
                                                                    to that venue for other issues of the case, “including those
are issue preclusive, only these grounds are addressed in
                                                                    pertaining to a counterclaim praying that he be restrained
detail.
                                                                    from infringing a patent of the defendant.” Id. SAP does not
                                                                    contest the propriety of this court hearing Wellogix's patent
A. Legal Standard                                                   counterclaims in the Declaratory Judgment Action.
 [1] [2] [3] [4] A federal court applies the federal law
of forum non conveniens in deciding a motion to dismiss            While Wellogix contends that “[c]ourts have applied this
pursuant to a forum-selection clause pointing to a state or        rule to hold that parties have waived forum selection clauses
foreign forum. Atlantic Marine Const. Co. v. U.S. Dist. Court      by initiating litigation,” 37 it has identified only one case
for the W. Dist. of Tex., ––– U.S. ––––, 134 S.Ct. 568,            in eighty years that did so, Jalin Realty Capital Advisors,
580, 187 L.Ed.2d 487 (2013). The doctrine of forum non             LLC v. A Better Wireless, NISP, LLC, No. 11–165 (JRT/
conveniens enables a district court, at its discretion, to decline LIB), 2012 WL 838439, at *3 (D.Minn. Mar. 12, 2012). 38
to exercise jurisdiction “if the moving party establishes that     Nevertheless, many federal courts have held, as a general
the convenience of the parties and the court and the interests     matter, that a contracting party can waive a forum-selection
of justice indicate that the case should be tried in another       clause, thereby relieving the other party of any obligation to
forum.” Karim v. Finch Shipping Co., 265 F.3d 258, 268             file suit in the originally specified forum. See, e.g., Innovative
(5th Cir.2001). Indeed, “the ultimate inquiry is where trial       Display Techs. LLC v. Microsoft Corp., No. 2–13–783,
will best serve the convenience *773 of the parties and            2014 WL 2757541, at *5 (W.D.Tex. June 17, 2014). SAP
the ends of justice.” Koster v. (American) Lumbermens Mut.         responds that “Wellogix entirely ignores the touchstone of the


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waiver inquiry: that a party cannot waive its forum-selection
clause right[ ] unless that party possessed an actual intent       When addressing waiver of a forum-selection clause,
                          39                                       however, the Fifth Circuit applied Texas law and concluded
to relinquish that right.”    Although there is some support
 *774 for this proposition, the correct source of the governing    that waiver requires an intent to relinquish a known
rule remains unclear.                                              right. 40 See GP Plastics Corp. v. Interboro Packaging
                                                                   Corp., 108 Fed.Appx. 832, 836 (5th Cir.2004) (per curium)
 [6] The enforceability of a forum-selection clause in federal     (unpublished) (citing Two Thirty Nine Joint Venture v. Joe, 60
court is governed by federal law, regardless of the basis          S.W.3d 896, 904 (Tex.App.-Dallas 2001)), rev'd, 145 S.W.3d
for federal jurisdiction. Haynsworth v. The Corporation, 121       150 (Tex.2004). 41
F.3d 956, 962 (5th Cir.1997); see also Jumara v. State Farm
Ins. Co., 55 F.3d 873, 877 (3d Cir.1995) (“Because questions        *775 Authorities cited by Wellogix also rely on state law to
of venue and the enforcement of forum-selection clauses            determine what constitutes waiver. See Unity Creations, Inc.
are essentially procedural, rather than substantive, in nature,    v. Trafcon Indus., 137 F.Supp.2d 108, 111 (E.D.N.Y.2001)
federal law applies in diversity cases irrespective of Erie.”)     (“In New York, when a party disregards a forum selection
(internal quotation marks and citations omitted). While there      clause and sues on a contract in an unauthorized forum, it
is still considerable confusion as to what body of law applies     waives the forum selection clause on the claims it pursues.”);
to the interpretation of a forum-selection clause, there is some   Dart Mech. Corp. v. Johnson Controls, Inc., No. 13–CV–
consensus that the court should apply the law that governs the     2941(JS) (WDW), 2013 WL 5937424, at *2 (E.D.N.Y. Nov.
rest of the contract. See Martinez v. Bloomberg LP, 740 F.3d       4, 2013) (citing cases that applied New York law).
211, 222–23 (2d Cir.2014) (reviewing cases from several
circuits).                                                         If federal law governs, the court has found no controlling
                                                                   cases on point and would therefore defer to the intent
Like interpreting a forum-selection clause, determining            requirement articulated in GP Plastics and other cases in
waiver of a forum-selection clause is arguably a matter of
                                                                   this district. 42 If the law applicable to the contract governs,
substantive contract law to be governed by the law applicable
                                                                   this case presents two additional complications: First, the
to the rest of the contract. Cf. CK DFW Partners Ltd.
                                                                   NetWeaver Agreement specifies that it is to be governed
v. City Kitchens, Inc., No. 3–6–1598, 2007 WL 2381259,
at *2 n. 8 (N.D.Tex. Aug. 17, 2007) (“Although federal             and construed in accordance with German law. 43 However,
law governs the enforceability of an otherwise valid forum         Wellogix has neither invoked the choice-of-law clause nor
selection clause, threshold questions concerning whether a         shown how SAP waived its rights under German law. Not
forum selection clause is triggered or is somehow nullified        having been formally invited, the court declines to venture
under the other terms of the contract is a question governed       further down this road. Cf. Int. Admins., Inc. v. Life Ins. Co.
by the applicable state law.”); Martinez, 740 F.3d at 221 (“In     of N.A., 753 F.2d 1373, 1376 n. 4 (7th Cir.1985) (“Although
construing a forum selection clause, a court may confront          we are not certain that Illinois law would apply to every
a wide range of contract law issues.... Erie warns against         issue, were the question properly argued, we are certain that
an approach that would force federal courts to generate            it is not the job of the trial judge to do the parties' work
a sprawling ‘federal general common law’ of contracts to           for them.”). Second, the Texas Supreme Court has adopted a
govern such questions whenever they arise in the context of        specific test to determine whether a party has waived a forum-
forum selection clauses.”).                                        selection clause, and it differs from the waiver test cited in GP
                                                                   Plastics. See In re ADM Investor Servs., Inc., 304 S.W.3d 371,
In the arbitration context, the Fifth Circuit holds that waiver    374 (Tex.2010) (“A party waives a forum-selection clause by
is to be addressed as a matter of federal law. See, e.g., Miller   substantially invoking the judicial process to the other party's
Brewing Co. v. Fort Worth Distrib. Co., 781 F.2d 494, 497 n.       detriment or prejudice.”). The parties have not addressed
4 (5th Cir.1986) (“The issue of arbitrability under the United     these issues; they simply disagree as to whether GP Plastics is
States Arbitration Act is a matter of federal substantive law.     distinguishable. Ultimately, the court concludes that SAP has
We thus dismiss out of hand FWDC's citation of 60 Tex.             not waived its rights under either the GP Plastics approach or
Jur.2d 199 for the proposition[ ] that waiver is a question of     the In re ADM approach.
fact based largely on intent.”) (internal quotation marks and
citations omitted).



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GP Plastics holds that waiver of a forum-selection clause
requires an intent to relinquish rights under the contract. 108    1. Wellogix's trade secrets claims are within the scope of
Fed.Appx. at 836–37. There is no evidence that SAP intended        the forum-selection clause.
to waive its rights under the forum-selection clause in this        [7] Before a court can consider enforcing a forum-selection
case. In fact, SAP's complaint in the Declaratory Judgment         clause, it must first determine whether the clause applies to
Action demonstrates an intent not to relinquish the relief          *777 the type of claims asserted in the lawsuit. Braspetro Oil
granted by Judge Ellison in 2008:                                  Servs. Co. v. Modec (USA), Inc., 240 Fed.Appx. 612, 616 (5th
                                                                   Cir.2007). SAP argues that Judge Ellison decided this issue in
                                                                   2008 and that his order has preclusive effect. Wellogix argues
                                                                   that the issue was not actually litigated before Judge Ellison.
      *776 SPECIFIC RELIEF NOT REQUESTED
                                                                    [8]    [9] Once a court has decided an issue of fact or
  SAP does not request any additional relief with respect to
                                                                   law necessary to its judgment in a case, the doctrine of
  the claims adjudicated in [Judge Ellison's December 2008
                                                                   collateral estoppel precludes parties from relitigating that
  Memorandum and Order] beyond that which has already
                                                                   issue in a subsequent case involving a party to the first. Allen
  been granted to SAP, all such claims being separate and
                                                                   v. McCurry, 449 U.S. 90, 101 S.Ct. 411, 414, 66 L.Ed.2d
  distinct from the non-infringement and invalidity of the
                                                                   308 (1980). “In this circuit, collateral estoppel applies when
   Wellogix Patents. 44                                            a previously litigated issue of law or fact was [1] identical to
The court therefore concludes that SAP did not intentionally       the present issue, [2] actually litigated, [3] necessary to a final
relinquish its rights under the forum-selection clause.            judgment, and [4] reviewed under the same standard as the
                                                                   present issue.” Duffy & McGovern Accommodation Servs. v.
In re ADM holds that a party waives a forum-selection clause       QCI Marine Offshore, Inc., 448 F.3d 825, 829 (5th Cir.2006).
by substantially invoking the judicial process to the other
party's detriment or prejudice, but that there is a strong         Here, the parties appear not to have “actually litigated”
presumption against such waiver. 45 304 S.W.3d at 374.             the scope of the forum-selection clause before Judge
Wellogix has not shown how it suffered any detriment or            Ellison. Although Wellogix arguably conceded that its trade
prejudice with respect to its trade secrets claims as a result     secrets claims arose out of the NetWeaver Agreement, 50
                                                        46
of SAP's Declaratory Judgment Action in this forum. The            concessions and stipulations do not necessarily have issue-
court therefore concludes that SAP has not waived its rights       preclusive effect. See Martin v. Trend Personnel Servs., No.
under the In re ADM approach. 47                                   3:13–CV–3953–L, 2014 WL 2894440, at *4 (N.D.Tex. June
                                                                   26, 2014); 18A Fed. Prac. & Proc. Juris. § 4443 (2d ed.). Even
                                                                   if resolution of the issue was logically necessary to Judge
C. The forum-selection clause is mandatory and                     Ellison's decision, the scope of the clause was neither briefed
enforceable with respect to Wellogix's trade secrets               by the parties nor fully addressed in Judge Ellison's Order.
claims.                                                            Although it is a close question, because the court reaches the
SAP argues that Judge Ellison's 2008 Order dismissing              same conclusion as Judge Ellison there is no reason to decide
Wellogix's trade secrets claims precludes Wellogix from            the preclusive effect of the Order on this issue.
challenging the enforcement of the forum-selection clause in
this action. 48 Wellogix does not contest the preclusive effect     [10] [11] [12] To determine whether a claim falls within
of Judge Ellison's order, except to argue that the trade secrets   the scope of a forum-selection clause, a court looks to the
claims are outside the scope of the forum-selection clause and     language of the contract. Braspetro, 240 Fed.Appx. at 616
                                                                   (citing Marinechance Shipping, Ltd. v. Sebastian, 143 F.3d
that this issue was not litigated before Judge Ellison. 49 The
                                                                   216, 222 (5th Cir.1998)). As with the potential waiver of a
court concludes that Judge Ellison's 2008 Order is entitled to
                                                                   forum-selection clause, a threshold issue here is what law
full preclusive effect as to the enforceability of the forum-
                                                                   to apply. The Fifth Circuit has applied federal law in this
selection clause. Because the scope of the clause was not fully
                                                                   context, drawing on maritime and diversity cases in this and
litigated before Judge Ellison, however, the court will address
                                                                   other circuits. See, e.g., id. Despite the choice-of-law clause
that issue.
                                                                   in the NetWeaver Agreement, the parties also rely on federal
                                                                   law. This court will do the same. See Phillips v. Audio Active



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Ltd., 494 F.3d 378, 386 (2d Cir.2007) (“We will assume from                      to any party without agreement by
the parties' briefing that they do not rely on any distinctive                   the receiving party to keep them
features of [the contractually selected] law and apply general                   secret. The SAP Parties, through
contract law principles and federal precedent to discern the                     their confidential and fiduciary
meaning and scope of the forum clause.”).                                        relationships with Wellogix, acquired
                                                                                 access to Wellogix's trade secrets.
The forum-selection clause in the NetWeaver Agreement                            By acknowledging and agreeing that
states:                                                                          Wellogix had valuable trade secrets,
                                                                                 the SAP Parties owed a duty not
             The Agreement shall be governed and                                 to use or disclose these trade
             construed in accordance with the laws                               secrets without Wellogix's permission.
             of the Federal Republic of Germany.                                 The SAP Parties, without permission
             The UNICITRAL purchase law shall                                    or legal authority from Wellogix,
             not apply. The place of jurisdiction                                misappropriated this highly valuable
             for all disputes arising between the                                technology in order to obtain and
             parties out of or in connection with this                           perform under various agreements
             Agreement *778 shall be Frankfurt,                                  with its other business partners and
             Germany. 51                                                         customers. As a direct result of
                                                                                 this misappropriation of trade secrets,
 [13] [14] [15] “The scope of a forum-select ion clause                          Wellogix has been damaged and the
is not limited solely to claims for breach of the contract                       SAP Parties have profited. 53
that contains it.” MaxEn Capital, LLC v. Sutherland, No.
H–08–3590, 2009 WL 936895, at *6 (S.D.Tex. Apr. 3,                    *779 [16] Case law cited by Wellogix supports this
2009). In a forum-selection clause, “[t]he term ‘arising’            conclusion as well, In arguing that SAP's patent claims
is generally interpreted as indicating a causal connection.”         against Wellogix also fall within the scope of the forum-
Braspetro, 240 Fed.Appx. at 616. Clauses that extend only to         selection clause, an issue the court need not reach, Wellogix
disputes “arising out of” a contract are construed narrowly,         relies primarily on Omron Healthcare, Inc. v. Maclaren
while clauses extending to disputes that “relate to” or              Exports Ltd., 28 F.3d 600 (7th Cir.1994). In Omron, the
“are connected with” the contract are construed broadly.             Seventh Circuit recognized that a test of but-for causation
Blueskygreenland Envtl. Solutions, LLC v. Rentar Envtl.              would be overly broad, and it held that “all disputes the
Solutions, Inc., No. H–11–1745, 2011 WL 6372842, at                  resolution of which arguably depend on the construction of
*4 (S.D.Tex. Dec. 20, 2011). Thus, the phrase “arising in            the agreement ‘arise out of’ that agreement” for purposes of
connection with” has been found to reach “every dispute              a forum-selection clause. Id. at 603. The phrase “arise out of”
between the parties having a significant relationship to the         is narrower than the language in the NetWeaver Agreement.
contract and all disputes having their origin or genesis in the      Nevertheless, since the NetWeaver Agreement governs the
contract.” Simula, Inc. v. Autoliv, Inc., 175 F.3d 716, 721
                                                                     confidentiality of Wellogix's trade secrets, 54 the resolution
(9th Cir.1999). Such a clause encompasses not only contract
                                                                     of Wellogix's claims “arguably depends” on construction of
claims, but also statutory and common law trade secrets
                                                                     the NetWeaver Agreement. Those claims would therefore
claims “in connection with” the agreement. Id. at 724–25. 52         also fall within the scope of the forum-selection clause under
                                                                     the Omron test.
Beginning with the first substantive paragraph of Wellogix's
trade secrets counterclaim, it is clear that this is “a dispute[ ]
arising between the parties out of or in connection with [the        2. The clause is mandatory, and it applies to both
NetWeaver Agreement]”:                                               defendants.
                                                                      [17] [18] “A party's consent to jurisdiction in one forum
             Wellogix took reasonable steps to keep                  does not necessarily waive its right to have an action heard
             its technology and other confidential                   in another.” City of New Orleans v. Mun. Admin. Servs., Inc.,
             information as trade secrets and would                  376 F.3d 501, 504 (5th Cir.2004). “For a forum selection
             not have disclosed its trade secrets                    clause to be exclusive, it must go beyond establishing that


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a particular forum will have jurisdiction and must clearly        Judge Ellison applied the Bremen standard, and he held that
demonstrate the parties' intent to make that jurisdiction         the forum-selection clause was enforceable. 60 To the extent
exclusive.” Id. Therefore, to be enforceable, a forum-            that the Bremen standard is still applicable and dispositive,
selection clause must be mandatory, not just permissive.          the court gives Judge Ellison's ruling full preclusive effect.
Caldas & Sons, Inc. v. Willingham, 17 F.3d 123, 127–28 (5th       Furthermore, since Wellogix has made no showing that this
Cir.1994). Judge Ellison determined that the forum-selection      is an “exceptional” or “most unusual” case, the clause is also
clause in the NetWeaver Agreement is mandatory. 55 Judge          enforceable under Atlantic Marine.
Ellison also determined that the forum-selection clause
applies to claims against both SAP AG, which was a signatory
                                                                D. Wellogix's claims should be dismissed for forum non
to the Agreement, and SAP America, which was not. 56 The
                                                                conveniens.
parties do not dispute the preclusive effect of these findings.
                                                                 [22]     [23] Following Atlantic Marine, a forum-selection
                                                                clause that points to a nonfederal forum must be evaluated
3. The clause is enforceable.                                   under the doctrine of forum non conveniens, including a
 [19] [20] Prior to the Supreme Court's decision in Atlantic balancing-of-interests analysis. Atlantic Marine, 134 S.Ct.
Marine, courts in this and other circuits enforced forum-       at 581–83. Because Judge Ellison's 2008 Order ruled on a
selection clauses under the standard articulated in M/S         12(b)(3) motion and did not apply a forum non conveniens
Bremen v. Zapata Off–Shore Co., 407 U.S. 1, 92 S.Ct.            analysis, 61 the court must now do so.
1907, 32 L.Ed.2d 513 (1972). Under the Bremen standard,
forum-selection clauses are prima facie valid and will be        [24] Under a traditional forum non conveniens analysis,
enforced unless the resisting party proves that enforcement     the court conducts a two-step inquiry. First, the court must
is unreasonable. Id. at 1913. 57 A resisting party can show     establish the existence of an alternative forum in which the
unreasonableness by establishing a number of relevant           case may be brought. Piper Aircraft Co. v. Reyno, 454 U.S.
                                                                235, 102 S.Ct. 252, 265 n. 22, 70 L.Ed.2d 419 (1981). Such a
factors, 58 However, *780 that party bears a “heavy burden
                                                                forum must be both available and adequate. *781 In re Air
of proof.” Bremen, 92 S.Ct. at 1917.
                                                                Crash Disaster Near New Orleans, La., 821 F.2d 1147, 1165
                                                                (5th Cir.1987), vacated on other grounds sub nom. Pan Am.
 [21] After Atlantic Marine, forum-selection clauses must
                                                                World Airways, Inc. v. Lopez, 490 U.S. 1032, 109 S.Ct. 1928,
be “given controlling weight in all but the most exceptional
                                                                104 L.Ed.2d 400 (1989), reinstated except as to damages by
cases,” 134 S.Ct. at 579 (internal quotation marks and citation
                                                                In re Air Crash Disaster Near New Orleans, La., 883 F.2d 17
omitted), because in “all but the most unusual cases ... the
                                                                (5th Cir.1989). “If an alternative forum is both available and
‘interest of justice’ is served by holding parties to their
                                                                adequate, the district court must then weigh various private
bargain,” id. at 583. 59                                        and public interest factors to determine whether dismissal is
                                                                warranted.” Saqui v. Pride Cent. Am., LLC, 595 F.3d 206, 211
As the Second Circuit has observed, Atlantic Marine “did        (5th Cir.2010).
not address the extent to which the ‘interest of justice’
test ... resembles the test developed under Bremen.” Martinez,
740 F.3d at 219. Although there is still some uncertainty       1. Availability
as to whether the Bremen factors remain relevant, courts         [25] [26] [27] “An alternative forum is available when
continue to apply them. See, e.g., id. at 228; Emrit v.         the entire case and all parties can come within the jurisdiction
Watts, Guerra, L.L.P., No. SA–13–CV–00473–XR, 2014 WL           of that forum.” Id. (internal quotation marks and citation
3970172, at *2 (W.D.Tex. Aug. 13, 2014) (“Assuming, for         omitted). “A defendant's submission to the jurisdiction
the sake of argument, that these factors all remain relevant    of a foreign forum sufficiently satisfies the availability
post-Atlantic Marine ....”); 1–Stop Fin. Serv. Centers of       requirement.” City of New Orleans Employees' Ret. Sys. ex
Am., LLC v. Astonish Results, LLC, No. A–13–CA–961–             rel. BP P.L.C. v. Hayward, 508 Fed.Appx. 293, 296 (5th
SS, 2014 WL 279669, at *6–*7 (W.D.Tex. Jan. 23, 2014)           Cir.2013); see also Saqui, 595 F.3d at 210 (“Fifth Circuit
(applying balancing-of-interest factors but also addressing     law has consistently held that when a defendant submits to
unreasonableness argument under Bremen standard).               the jurisdiction of an alternate forum, that renders the forum
                                                                available for purposes of FNC analysis.”).



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                                                                   DTEX, LLC v. BBVA Bancomer, S.A., 508 F.3d 785, 796 (5th
 [28] To dismiss a case for forum non conveniens a court           Cir.2007) (internal quotation marks and citation omitted).
must establish that the defendants are amenable to process in      Because Wellogix has made no showing to the contrary,
the alternative forum. In re BP Shareholder Derivative Litig.,     the court presumes that Germany is an adequate alternative
No. 10–MD–2185, 2011 WL 4345209, at *6 (S.D.Tex. Sept.             forum. Furthermore, the parties expressly agreed to both a
                                                                   German forum and the application of German law. The court
15, 2011) aff'd sub nom. City of New Orleans Employees'
Ret. Sys. ex rel. BP P.L.C. v. Hayward, 508 Fed.Appx. 293          sees no injustice in holding the parties to their bargain.
(5th Cir.2013). Neither party has addressed the availability of
Germany as a forum or the Defendants' amenability to process
                                                                   3. Balancing of Interests
there. Courts in this circuit sometimes condition dismissal for
                                                                    [32] [33] Atlantic Marine modified the typical forum non
forum non conveniens on defendants stipulating that they will
                                                                   conveniens analysis for cases involving a forum-selection
submit to the jurisdiction of the foreign court. See, e.g., id.
                                                                   clause. Because such a clause “represents the parties'
However, this practice pre-dates Atlantic Marine, and it is not
                                                                   agreement as to the most proper forum,” the plaintiff's choice
clear that such conditions are required in a case involving a
                                                                   of forum “merits no weight,” and a court “must deem the
forum-selection clause.
                                                                   private-interest factors to weigh entirely in favor of the
                                                                   preselected forum.” Atlantic Marine, 134 S.Ct. at 581–82.
In light of the mandatory forum-selection clause providing for
                                                                   Thus a court may only consider arguments about public-
jurisdiction in Frankfurt, Germany, and Defendants' argument
                                                                   interest factors. 62 Id. at 582. “Because those factors will
that the clause applies to claims against both SAP AG and
                                                                   rarely defeat a transfer motion, the practical result is that
SAP America, the court is satisfied that Defendants have
                                                                   forum-selection clauses should control except in unusual
consented to the jurisdiction of the German courts. The court
                                                                   cases.” Id. at 583. “[S]uch cases will not be common.” Id.
is not inclined to delay the resolution of this matter by
imposing conditions on dismissal. However, should Wellogix
                                                                   [34]    SAP points to a number of public-interest factors
have a good-faith argument that SAP AG or SAP America is
not amenable to process in Germany, the court may reconsider       favoring dismissal. 63 However, under Atlantic Marine, the
and condition dismissal on an appropriate stipulation. Barring     party resisting enforcement has the burden of showing that
a good-faith showing to the contrary, the Court finds that         public-interest factors “overwhelmingly disfavor” dismissal.
German courts provide an available alternative forum in            Id. Because Wellogix has made no showing that public-
which to proceed with this case.                                   interest factors disfavor dismissal, it has not met its burden
                                                                   under Atlantic Marine. This is not an “unusual case,” and the
                                                                   forum-selection clause should control.
2. Adequacy
 [29] [30] [31] An alternative forum is adequate “when
the parties will not be deprived of all remedies or treated
                                                                                   III. Conclusions and Order
unfairly, even though they might not enjoy the same benefits
as they might receive in an American court.” In re Air Crash       For the reasons stated above, Defendants SAP America,
Disaster, 821 F.2d at 1165 (citing Piper, 102 S.Ct. at 265;        Inc.'s and SAP AG's Motion for Summary Judgment is
Syndicate 420 at Lloyd's London v. Early Am. Ins. Co., 796         GRANTED. However, this court may reassert jurisdiction
F.2d 821, 829 (5th Cir.1986)). Although neither party has          upon timely notification if the courts of Germany refuse
addressed the adequacy of Germany as a forum, a party              to accept jurisdiction for reasons other than Wellogix's
moving to dismiss for forum non conveniens “may rely on            refusal to pursue an action or to comply with the procedural
a presumption that the foreign forum is adequate.” Indusoft,       requirements of German courts. The court retains jurisdiction
Inc. v. Taccolini, 560 Fed.Appx. 245, 249 (5th Cir.2014).          to supervise the terms of this dismissal.
“The substantiative law of the foreign forum is presumed
to be adequate unless the plaintiff makes some showing
to the contrary, or unless conditions in the foreign forum         All Citations
 *782 made known to the court, plainly demonstrate that
the plaintiff is highly unlikely to obtain basic justice there.”   58 F.Supp.3d 766




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Footnotes
1      Wellogix's Opposition to SAP America, Inc.'s and SAP AG's Motion for Summary Judgment (“Opposition to Motion
       for Summary Judgment”), Case No. H–14–741, Docket Entry No. 15, pp. 8–9. Page citations are to the pagination
       imprinted by the federal court's electronic filing system at the top and right of the document. For a succinct summary of
       the background of this dispute see Facts and Proceedings, Wellogix v. Accenture, L.L.P., 716 F.3d 867, 872–73 (5th
       Cir.2013).
2      Plaintiff's First Amended Complaint, Case No. G–8–119, Docket Entry No. 53, p. 3.
3      Opposition to Motion for Summary Judgment, Case No. H–14–741, Docket Entry No. 15, p. 7.
4      Id.
5      Wellogix, 716 F.3d at 873.
6      Id.
7      Plaintiff's First Amended Complaint, Case No. G–8–119, Docket Entry No. 53, pp. 5–6.
8      Complaint for Declaratory Relief, Case No. H–10–1224, Docket Entry No. 1, pp. 3–4.
9      Id.
10     Wellogix, 716 F.3d at 873.
11     Id.
12     Opposition to Motion for Summary Judgment, Case No. H–14–741, Docket Entry No. 15, p. 9.
13     See Notice of Removal, Case No. G–8–119, Docket Entry No. 1.
14     See Plaintiff's First Amended Complaint, Case No. G–8–119, Docket Entry No. 53, pp. 11–30.
15     Wellogix, 716 F.3d at 874.
16     Id.
17     Id. Ultimately, Wellogix accepted a remittitur of the punitive damages to $18.2 million, the amount it sought at trial. Id.
18     See Memorandum and Order, Case No. G–8–119, Docket Entry No. 54.
19     Id. at 5–16.
20     Id. at 16.
21     Complaint for Declaratory Relief, Case No. H–10–1224, Docket Entry No. 1.
22     Id. at 8–14. SAP later filed another declaratory judgment action, Case No. H–11–2840, which added a sixth Wellogix
       patent. It was consolidated into the pending Declaratory Judgment Action. See Order, Case No. H–10–1224, Docket
       Entry No. 72.
23     Notice of Filing of Requests for Reexamination, Case No. H–10–1224, Docket Entry No. 21.
24     SAP America, Inc.'s Motion to Stay Pending Reexamination, Case No. H–10–1224, Docket Entry No. 30.
25     Defendants Wellogix, Inc. and Wellogix Technology Licensing's Amended Answer and Counterclaims, Case No. H–10–
       1224, Docket Entry No. 38, pp. 9–43.
26     Order, Case No. H–10–1224, Docket Entry No. 63.
27     See Transcript of Proceedings, Case No. H–10–1224, Docket Entry No. 112, pp. 4–5.
28     Id. at 5–8.
29     Defendants Wellogix, Inc. and Wellogix Technology Licensing's Amended Answer and Amended Counterclaims, Case
       No. H–10–1224, Docket Entry No. 104; see also Case No. H–14–741, Docket Entry No. 1.
30     Counter–Plaintiff Wellogix, Inc.'s Motion for Severence, Case No. H–10–1224, Docket Entry No. 105; Order on Wellogix,
       Inc.'s Motion for Severance, Case No. H–10–1224, Docket Entry No. 106; Defendants Wellogix, Inc. and Wellogix
       Technology Licensing's Amended Answer and Amended Counterclaims, Case No. H–14–741, Docket Entry No. 1.
31     Motion for Summary Judgment, Case No. H–14–741, Docket Entry No. 8.
32     Compare Defendants Wellogix, Inc. and Wellogix Technology Licensing's Amended Answer and Amended
       Counterclaims, Case No. H–14–741, Docket Entry No. 1, pp. 45–46 ¶¶ 242–249, with Plaintiff's First Amended Complaint,
       Case No. G–8–119, Docket Entry No. 53, pp. 23–24 ¶¶ 102–106.
33     See Defendants Wellogix, Inc. and Wellogix Technology Licensing's Amended Answer and Amended Counterclaims,
       Case No. H–14–741, Docket Entry No. 1, p. 46 ¶¶ 247–249.
34     Opposition to Motion for Summary Judgment, Case No. H–14–741, Docket Entry No. 15, pp. 19–29.




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35     Motion for Summary Judgment, Case No. H–14–741, Docket Entry No. 8, pp. 27–31; Defendants SAP America, Inc.'s
       and SAP AG's Reply Brief in Support of Their Motion for Summary Judgment, Case No. H–14–741, Docket Entry No.
       16, pp. 4–10.
36     Opposition to Motion for Summary Judgment, Case No. H–14–741, Docket Entry No. 15, p. 20.
37     Id. at 21.
38     The other cases Wellogix cites are either inapposite, see id. at 20–21, or apply New York state law, see id. at 21–22.
39     Defendants SAP America, Inc.'s and SAP AG's Reply Brief in Support of their Motion for Summary Judgment, Case No.
       H–14–741, Docket Entry No. 16, p. 8 (internal quotation marks and citation omitted).
40     The court did not specify whether or why state or federal law should control the issue.
41     The Dallas Court of Appeals in Two Thirty Nine Joint Venture recited the elements of waiver, but it was in the context of
       waiving a conflict of interest, not a waiver of contractual rights or a forum-selection clause. 60 S.W.3d at 911. But see
       Johnson v. Structured Asset Servs., LLC, 148 S.W.3d 711, 722 (Tex.App.-Dallas 2004, no pet.) (“In order to establish
       a waiver of rights under a contract, there must be proof of an intent to relinquish a known right.”); In re EPIC Holdings,
       Inc., 985 S.W.2d 41, 57 (Tex.1998) (“Waiver is an affirmative defense.... Waiver occurs when a party either intentionally
       relinquishes a known right or engages in intentional conduct inconsistent with claiming that right.”).
42     Other courts in this district have required intent to waive a forum-select ion clause, though the source of the governing
       rule remains unclear. See Texas Cmty. Bank, N.A. v. Dunn, No. H–9–3514, 2010 WL 3220652, at *2 n. 1 (S.D.Tex. Aug.
       13, 2010) (finding defendant's waiver argument “unpersuasive” because plaintiff “did not ‘intentionally relinquish’ its rights
       under the forum-selection clause.”) (no citation in original); Bancroft Life & Cas. ICC, Ltd. v. Davnic Ventures, L.P., No.
       H–12–2015, 2013 WL 1222112, at *2 (S.D.Tex. Mar. 25, 2013) (“ ‘For waiver to occur, there must be an existing right,
       knowledge of its existence, and either an actual intention to relinquish that right or conduct so inconsistent with the intent
       to enforce the right as to induce a reasonable belief that it has been relinquished.’ ”) (quoting N. Am. Specialty Ins. Co.
       v. Debis Fin. Servs., Inc., 513 F.3d 466, 470 (5th Cir.2007) (citing Steptore v. Masco Const. Co., 643 So.2d 1213, 1215
       (La.1994))). The Seventh Circuit has also held that waiver of a forum-selection clause requires “voluntary or intentional
       relinquishment of a known right.” Haber v. Biomet, Inc., 578 F.3d 553, 558 (7th Cir.2009). For authority, the court quoted
       a Seventh Circuit ERISA case, Vershaw v. Nw. Nat. Life Ins. Co., 979 F.2d 557, 560 (7th Cir.1992), which in turn quoted
       a Fifth Circuit ERISA case, Pitts v. Am. Sec. Life Ins. Co., 931 F.2d 351, 357 (5th Cir.1991).
43     Powered by SAP NetWeaver Cooperation Agreement, Exhibit A to Motion for Summary Judgment, Docket Entry No.
       8–2, p. 13 ¶ 15.2.
44     Complaint for Declaratory Relief, Case No. H–10–1224, Docket Entry No. 1, p. 14.
45     The Fifth Circuit applies a similar test under federal law in the arbitration context: “Although waiver of arbitration is a
       disfavored finding, ‘[w]aiver will be found when the party seeking arbitration substantially invokes the judicial process to
       the detriment or prejudice of the other party.’ ” Nicholas v. KBR, Inc., 565 F.3d 904, 907 (5th Cir.2009) (citation omitted).
       “Prejudice in the context of arbitration waiver refers to delay, expense, and damage to a party's legal position.” Id. at 910.
46     As Wellogix has stated, “the theft of trade secret claims stand completely independent of the patent claims.” Wellogix, Inc.
       and Wellogix Technology Licensing, L.L.C.'s Renewed Motion to Lift Stay and Request for Entry of Scheduling Order,
       Case No. H–10–1224, Docket Entry No. 98, p. 3 ¶ 6. Judge Ellison was of the same opinion when, in 2010, he denied
       Wellogix's motion to consolidate the patent action with the then-pending trade secrets claims against Accenture. See
       Memorandum and Order, Case No. G–8–119, Docket Entry No. 203, pp. 3–5.
47     Because Wellogix has failed to establish that SAP waived any rights under the forum-selection clause, and neither party
       seeks to enforce the clause in the Declaratory Judgment Action, the court need not address whether the patent claims
       fall within the scope of the forum-selection clause.
48     Motion for Summary Judgment, Case No. H–14–741, Docket Entry No. 8, pp. 19–24.
49     See Opposition to Motion for Summary Judgment, Case No. H–14–741, Docket Entry No. 15, pp. 24–25.
50     See Wellogix, Inc.'s Response in Opposition to SAP America, Inc., SAP A.G. and Manfred Heil's Motion to Dismiss for
       Improper Venue, Case No. G–8–119, Docket Entry No. 22, p. 7 (“Plaintiff has pled that SAP A.G. has misappropriated
       confidential information and misappropriated trade secrets. These claims arise under both the Content Certification
       Agreement (Pennsylvania clause) as well as the [NetWeaver] Agreement (Germany clause).”)
51     Powered by SAP NetWeaver Cooperation Agreement, Exhibit A to Motion for Summary Judgment, Case No. H–14–741,
       Docket Entry No. 8–2, p. 13 ¶ 15.2.
52     While some of these cases deal with arbitration clauses, the scope given to the phrase should not differ for purposes
       of a forum-selection clause. Omron Healthcare, Inc. v. Maclaren Exports Ltd., 28 F.3d 600, 603 (7th Cir.1994); see also
       Opposition to Motion for Summary Judgment, Case No. H–14–741, Docket Entry No. 15, p. 23 n. 4 (“Cases involving


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       arbitration clauses are broadly applicable to disputes about forum-selection clauses, because an agreement to arbitrate
       before a specific tribunal is considered by courts to be nothing more than a ‘specialized kind of forum-selection clause.’
       ” (quoting Scherk v. Alberto–Culver Co., 417 U.S. 506, 94 S.Ct. 2449, 2457, 41 L.Ed.2d 270 (1974))).
53     Defendants Wellogix, Inc. and Wellogix Technology Licensing's Amended Answer and Amended Counterclaims, Case
       No. H–14–741, Docket Entry No. 1, p. 45 ¶ 243; see also Plaintiff's First Amended Complaint, Case No. G–8–119, Docket
       Entry No. 53, p. 6 ¶ 25 (“As part of this agreement, after its execution on or about March 22, 2005 through March 24,
       2005, several SAP/SAP A.G. employees went to Wellogix's offices for a three-day workshop wherein Wellogix disclosed
       highly confidential information and trade secrets.” (emphasis added)).
54     Powered by SAP NetWeaver Cooperation Agreement, Exhibit A to Motion for Summary Judgment, Case No. H–14–741,
       Docket Entry No. 8–2, p. 10 ¶¶ 12.1–12.2; see also Plaintiff's First Amended Complaint, Case No. G–8–119, Docket
       Entry No. 53, p. 6 ¶ 24 (“SAP/SAP A.G. is required under the NetWeaver Partner Agreement to strictly maintain the
       confidential information and trade secrets of Wellogix.”)
55     Memorandum and Order, Case No. G–8–119, Docket Entry No. 54, pp. 5–9.
56     Id. at 14–16.
57     Although Bremen was an admiralty case, this and other circuits have applied it in diversity and federal question cases as
       well. Haynsworth v. The Corporation, 121 F.3d 956, 962 & n. 10 (5th Cir.1997).
58     To show that a forum-selection clause is unreasonable, the resisting party must prove: “(1) the incorporation of the forum-
       selection clause into the agreement was the product of fraud or overreaching; (2) the party seeking to escape enforcement
       ‘will for all practical purposes be deprived of his day in court’ because of the grave inconvenience or unfairness of the
       selected forum; (3) the fundamental unfairness of the chosen law will deprive the plaintiff of a remedy; or (4) enforcement
       of the forum selection clause would contravene a strong public policy of the forum state.” Id. at 963 (citing Carnival Cruise
       Lines, Inc. v. Shute, 499 U.S. 585, 111 S.Ct. 1522, 1528, 113 L.Ed.2d 622 (1991); Bremen, 92 S.Ct. at 1914–15, 1916,
       1917).
59     The Court in Atlantic Marine established this standard for motions to transfer under § 1404(a), which permits a transfer “in
       the interest of justice.” However, the court stated that “Section 1404(a) is merely a codification of forum non conveniens
       for the subset of cases in which the transferee forum is within the federal court system.” Atlantic Marine, 134 S.Ct. at
       580. The Court made clear that “the same standards should apply to motions to dismiss for forum non conveniens in
       cases involving valid forum-selection clauses pointing to state or federal forums.” Id. at 583 n. 8; see also Emrit v. Watts,
       Guerra, L.L.P., No. SA–13–473, 2014 WL 3970172, at *1 n. 5 (W.D.Tex. Aug. 13, 2014) (“[T]here is no doubt that Atlantic
       Marine controls the outcome of this case.”).
60     See Memorandum and Order, Case No. G–8–119, Docket Entry No. 54, pp. 6 n. 2, 9–14.
61     See id. at 4–5.
62     “Public-interest factors may include ‘the administrative difficulties flowing from court congestion; the local interest in having
       localized controversies decided at home; [and] the interest in having the trial of a diversity case in a forum that is at home
       with the law.’ ” Atlantic Marine, 134 S.Ct. at 581 n. 6 (2013) (quoting Piper, 102 S.Ct. at 258 n. 6).
63     See Motion for Summary Judgment, Case No. H–14–741, Docket Entry No. 8, pp. 26–27.


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In re Lisa Laser USA, Inc., 310 S.W.3d 880 (2010)
53 Tex. Sup. Ct. J. 624


                                                                 [3]   Mandamus
                    310 S.W.3d 880                                          Modification or vacation of judgment or
                 Supreme Court of Texas.                               order
            In re LISA LASER USA, INC. and                             Mandamus
          Lisa Laser Products, oHG, Relators.                             Change of venue and transfer of causes
                                                                       An appellate remedy is inadequate, so as to
            No. 09–0557.          |   April 16, 2010.                  warrant mandamus relief, when a trial court
                                                                       improperly refuses to enforce a forum-selection
Synopsis
                                                                       clause, because allowing the trial to go forward
Background: Medical-device distributor brought breach-of-
                                                                       will vitiate and render illusory the subject matter
contract action against manufacturer. The 98th District Court,
                                                                       of an appeal, i.e., trial in the proper forum.
Travis County, Rhonda G. Hurley, J., denied manufacturer's
motion to dismiss for improper forum on basis of contractual           15 Cases that cite this headnote
forum-selection clause. Manufacturer filed petition for
mandamus relief. The Court of Appeals denied the petition.
                                                                 [4]   Contracts
Manufacturer filed petition for mandamus relief in the
                                                                           Agreement as to place of bringing suit;
Supreme Court.
                                                                       forum selection clauses
                                                                       In general, forum-selection clauses should be
                                                                       given full effect, and subjecting a party to
[Holding:] The Supreme Court held that distributor's claims            trial in a forum other than the contractually
were required to be litigated in California.                           chosen one amounts to clear harassment,
                                                                       injecting inefficiency by enabling forum-
                                                                       shopping, wasting judicial resources, delaying
Petition conditionally granted.
                                                                       adjudication on the merits, and skewing
                                                                       settlement dynamics.

 West Headnotes (7)                                                    7 Cases that cite this headnote


 [1]    Mandamus                                                 [5]   Contracts
           Remedy by Appeal or Writ of Error                               Legal remedies and proceedings

        Mandamus                                                       Distributor's claims against medical-device
           Matters of discretion                                       manufacturer, alleging that manufacturer failed
                                                                       to inform distributor of new products and failed
        Mandamus relief is available when a trial court
                                                                       to offer distributor a right of first refusal to
        clearly abuses its discretion and relief on appeal
                                                                       distribute new products, arose out of distribution
        after a final judgment is inadequate.
                                                                       agreement between the parties, rather than
        4 Cases that cite this headnote                                general obligations imposed by law, and thus,
                                                                       pursuant to agreement's forum-selection clause,
                                                                       claims were required to be litigated in California.
 [2]    Mandamus
           Change of venue and transfer of causes                      8 Cases that cite this headnote
        A trial court abuses its discretion, so as to warrant
        mandamus relief, when it fails to properly               [6]   Contracts
        interpret or apply a forum-selection clause.                       Legal remedies and proceedings

        21 Cases that cite this headnote                               Contract between medical-device manufacturer
                                                                       and distributor included both document titled
                                                                       “Distribution Agreement” and document titled



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In re Lisa Laser USA, Inc., 310 S.W.3d 880 (2010)
53 Tex. Sup. Ct. J. 624

        “Standard Terms and Conditions,” and thus                 specifically referenced only one of the two defendants sued.
        forum-selection clause contained in terms                 We hold that the trial court abused its discretion in failing to
        and conditions applied to dispute arising out             enforce the clause, and we conditionally grant the petition.
        of manufacturer's alleged breach of terms
        contained in distribution agreement, since                Relator Lisa Laser Products, oHG 1 (“Lisa Germany”) is
        neither document alone contained enough terms             a German partnership that manufactures lasers for use
        to be a separate contract; terms and conditions           in various medical fields. Lisa Laser USA, Inc., (“Lisa
        document did not mention what product was the             USA”) is the registered assumed named of a California
        subject of the agreement between the parties,             corporation affiliated with Lisa Germany (collectively, “Lisa
        and distribution agreement, while setting out the         Laser”). Lisa Germany manufactures medical lasers, and Lisa
        rough outline of the parties' obligations, was also       USA is the distributor of those products within the United
        incomplete.                                               States. In 2005, Lisa USA signed a distribution agreement
                                                                  with Real Party in Interest HealthTronics, Inc., a Georgia
        1 Cases that cite this headnote
                                                                  corporation headquartered in Austin, Texas. In 2007, *882
                                                                  the agreement was superseded by an Amended and Restated
 [7]    Contracts                                                 Distribution Agreement (the Distribution Agreement or
            Legal remedies and proceedings                        Agreement) that included Lisa USA and HealthTronics, the
        Forum-selection clause contained in distribution          original contracting parties, and added Lisa Germany as a
        agreement between medical-device distributor,             party. The President of Lisa USA, the CEO of Lisa Germany,
        German       manufacturer,     and     California         and the Senior Vice–President for Medical Products of
        corporation affiliated with manufacturer,                 HealthTronics signed it.
        applied to distributor's claims against German
        manufacturer as well as claims against California         The Distribution Agreement gave HealthTronics exclusive
        corporation, and thus claims were required to             U.S. distribution rights for particular Lisa Laser medical
        be litigated in California; German manufacturer           devices. It also provided HealthTronics with rights of
        was a signatory to agreement and forum-                   first refusal to distribute new, related products that Lisa
        selection clause applied to “any dispute” arising         Laser may produce, on condition that HealthTronics fulfill
        from agreement.                                           yearly purchase quotas and comply with other requirements.
                                                                  The Distribution Agreement also contained eight separately
        8 Cases that cite this headnote                           attached Exhibits, labeled A through H. Exhibit F is Lisa
                                                                  Laser's “Standard Terms and Conditions.” Its preamble states:

                                                                               The following standard terms and
Attorneys and Law Firms                                                        conditions of sale apply to sales
                                                                               by Seller [Lisa Laser USA, Inc.] to
*881 Derek Lawrence Davis, Byrd Davis Furman, L.L.P.,                          HealthTronics, Inc. ... pursuant to
Austin, for Relators.                                                          the Distribution Agreement between
                                                                               the parties, a copy of which is
George Breck Harrison, Joshua Abraham Romero, Jackson                          attached hereto and incorporated
Walker L.L.P., Austin, for Real Parties in Interest.                           herein by this reference, except
                                                                               as specifically modified in the
Opinion
                                                                               Distribution Agreement.
PER CURIAM.
                                                                  Exhibit F also includes the following forum-selection clause,
In this mandamus petition we are asked to review a trial          in Paragraph 16:
court's refusal to enforce a forum-selection clause designating
                                                                    APPLICABLE LAW; JURISDICTION AND VENUE
a California forum for any lawsuits “arising out of” a
distribution agreement. The clause was in an exhibit to             This agreement will be governed by the laws of the
the agreement, signed by all the parties, but the exhibit           State of California. The California state [or federal] courts



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In re Lisa Laser USA, Inc., 310 S.W.3d 880 (2010)
53 Tex. Sup. Ct. J. 624

  of Alameda County, California ... will have exclusive             mandamus. 2009 WL 2217745. Following the denial, Lisa
  jurisdiction and venue over any dispute arising out of this       Laser petitioned this Court for relief.
  agreement, and [HealthTronics] hereby consents to the
  jurisdiction of such courts.                                       [1]    [2]    [3]    [4] Mandamus relief is available when a
                                                                    trial court clearly abuses its discretion and relief on appeal
Exhibit F is mentioned in the body of the Distribution              after a final judgment is inadequate. In re Prudential Ins.
Agreement in Section 4, titled “Terms of Purchase of                Co. of Am., 148 S.W.3d 124, 135–36 (Tex.2004). 2 A trial
Products By Customer.” Relevant here, under the subhead             court abuses its discretion when it fails to properly interpret or
“Terms of Purchase Orders” in Section 4, Exhibit F is               apply a forum-selection clause. In re Laibe Corp., 307 S.W.3d
incorporated:                                                       314 (Tex.2010). Further, an appellate remedy is inadequate
                                                                    when a trial court improperly refuses to enforce a forum-
             To the extent consistent with the
                                                                    selection clause because allowing the trial to go forward
             terms set forth in this Agreement,
                                                                    will “vitiate and render illusory the subject matter of an
             Lisa Laser USA['s] standard terms
                                                                    appeal”—i.e., trial in the proper forum. In re AIU Ins. Co.,
             and conditions, set forth as Exhibit
                                                                    148 S.W.3d 109, 115 (Tex.2004) (quoting Jack B. Anglin
             F hereto, shall be applicable
                                                                    Co. v. Tipps, 842 S.W.2d 266, 272 (Tex.1992)); accord In
             to the shipment of any Product
                                                                    re Laibe Corp., 307 S.W.3d at 316. Accordingly, we have
             to [HealthTronics]. [HealthTronics]'s
                                                                    repeatedly held that mandamus relief is available to enforce
             purchase orders submitted to Lisa
                                                                    an unambiguous forum-selection clause in a contract. See,
             Laser USA from time to time with
                                                                    e.g., id.; In re AIU Ins. Co., 148 S.W.3d at 115–19; In re
             respect to Products to be purchased
                                                                    AutoNation, Inc., 228 S.W.3d at 665; In re Int'l Profit Assocs.
             hereunder shall be governed by the
                                                                    I, 274 S.W.3d at 674; In re Int'l Profit Assocs. II, 286 S.W.3d
             terms of this Agreement, and nothing
                                                                    at 922; In re ADM Investor Servs., Inc., 304 S.W.3d 371
             contained in any such purchase order
                                                                    (Tex.2010). In general, forum-selection clauses should be
             shall in any way modify such terms of
                                                                    given full effect, and subjecting a party to trial in a forum
             purchase or add any additional terms
                                                                    other than the contractually chosen one amounts to “ ‘clear
             or conditions.
                                                                    harassment’ ... injecting inefficiency by enabling forum-
                                                                    shopping, wasting judicial resources, delaying adjudication
In September 2008, Lisa Laser notified HealthTronics that it        on the merits, and skewing settlement dynamics....” In re
was in default for failing to use its best efforts to market and    AutoNation, 228 S.W.3d at 667–68 (quoting In re AIU Ins.
sell the products to which it had exclusivity. HealthTronics
                                                                    Co., 148 S.W.3d at 117). 3
alleged that it was abiding by the minimum purchase
requirements during the contract period, but that Lisa Laser
                                                                     *884 [5] In this case, HealthTronics argues that the forum-
had refused to provide information about new products, failed
                                                                    selection clause does not apply to the Texas lawsuit. First, it
to offer a right of first refusal to distribute new products,
                                                                    argues that because the clause was contained only in Exhibit
and began to directly market new products in the United
                                                                    F, it applies only to claims specifically related to “sales by
States. HealthTronics then filed suit in district court in Travis
                                                                    Seller ... to HealthTronics,” and not to any other claims based
County, Texas against both Lisa USA and Lisa Germany
                                                                    on the parties' relationships (such as breach of contract for
for breach of contract and tortious interference with contract
                                                                    failure to provide rights of first refusal or tortiously interfering
(related to confidentiality and non-solicitation agreements
                                                                    with HealthTronics's contracts with its employees). Second,
between HealthTronics and its former employees) and sought
                                                                    HealthTronics argues that the 2007 modification of the
monetary damages and injunctive relief.
                                                                    limiting language in the preamble indicates the parties' intent
                                                                    to limit the forum-selection clause only to disputes over
In the trial court, Lisa Laser filed a motion to dismiss for
                                                                    sales transactions. Because all of HealthTronics's claims are
improper forum on the basis of the forum-selection clause
                                                                    directed at protecting its rights for the marketing and sale of
in Exhibit F. The trial court denied the motion. *883 Lisa
                                                                    the new lasers “to third parties” and protecting its confidential
Laser then sought mandamus relief and an emergency stay at
                                                                    information, HealthTronics contends the claims in the Texas
the court of appeals. After originally granting the requested
                                                                    lawsuit are outside the scope of the clause and the Court
stay, the court of appeals denied the petition for writ of
                                                                    should enforce the language of the Agreement as written


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and bargained for. Finally, HealthTronics argues because              [6] HealthTronics's textual argument—that the forum-
the plain language of the preamble to Exhibit F indicates            selection clause applies only to sales “By Seller to
that the exhibit applies only to sales by “Seller” [Lisa             HealthTronics” and that Section 4 of the Distribution
USA] to HealthTronics, the forum-selection clause does not           Agreement incorporates the standard terms and conditions
apply to its claims against Lisa Germany, a signatory to the         as “applicable to the shipment of any Product to the
Distribution Agreement but an entity that was specifically           Distributor”—is unavailing. The Distribution Agreement and
omitted from the terms in Exhibit F.                                 the Standard Terms and Conditions in Exhibit F are not
                                                                     separate, or even separable, agreements. Exhibit F does
In this case, HealthTronics does not argue that the forum-           not contain price or quantity terms. Cf. TEX. BUS. &
selection clause is unenforceable, but that it only applies          COM.CODE § 2.201 (setting basic terms for enforceable
to part of the contract—sales transactions between it and            contracts for the sale of goods with a value over $500);
Lisa USA. In examining whether claims brought by the                 Miller v. Vaughn & Taylor Const. Co., 345 S.W.2d 852,
plaintiff were within the scope of the clauses, this Court held      853 (Tex.Civ.App.-Fort Worth 1961, writ ref'd n.r.e.) (“A
that a reviewing court should engage in a “common-sense              contract is not sufficiently certain to be enforced if it fails
examination of the claims and the forum-selection clause to          to specify the quantity of the goods to be sold.”). Nor
determine if the clause covers the claims.” Int'l Profit Assocs.     does it mention any particular product to be distributed.
I, 274 S.W.3d at 677 (citing Ginter ex rel. Ballard v. Belcher,      It is nothing more than the standard terms of purchase
Prendergast & Laporte, 536 F.3d 439, 444 (5th Cir.2008));            that would normally accompany any commercial purchase
In re Laibe Corp., 307 S.W.3d at 316. In International               order. Likewise, the Distribution Agreement, while setting
Profit Associates I, the Court borrowed from its arbitration         out the rough outline of the parties' obligations, is also
jurisprudence to determine whether a forum-selection clause          incomplete. It requires and incorporates the additional terms
included in contracts to provide business consulting services        from the exhibits to fully elucidate the parties' agreement. The
would apply to a tort suit. 274 S.W.3d at 674. In that case,         exhibits are consecutively paginated following the body of
the plaintiff the consulting company and its employee for            the Distribution Agreement. The Distribution Agreement and
negligently providing services, fraud, and breach of duty of         the Exhibits were intended to be one document. And even if
good faith after the consulting company's employee allegedly         the exhibits have some independent significance, as this Court
embezzled large sums of money from the client. The Court             recognized in In re Laibe, “[a] contract can consist of more
held that “whether claims seek a direct benefit from a contract      than one document [and d]ocuments pertaining to the same
turns on the substance of the claim, not artful pleading....         transaction may be read together.” In re Laibe Corp., 307
[A] claim is brought in contract if liability arises from the        S.W.3d at 317. This is a prime example of a single transaction
contract, while a claim is brought in tort if liability is derived   governed by a document with multiple subparts, referencing
from other general obligations imposed by law.” Id. at 677           each other, and substantially incomplete without each other,
(citing In re Weekley Homes, L.P., 180 S.W.3d 127, 131–32            but together comprising the Agreement.
(Tex.2005)). Using that rationale, the Court held that the tort
claims arose from the contractual relationship of the parties.       Because neither document could be considered “this
Id.                                                                  Agreement” by itself, the common sense approach is to
                                                                     read the two documents as multiple documents describing a
Although In re International Profit Associates I discussed a         singular transaction, with the forum-selection clause applying
tort/contract dichotomy, rather than the scope of contractual        to all claims arising out of the Distribution Agreement.
coverage, its reasoning applies in this case. HealthTronics          Int'l Profit Assocs. I, 274 S.W.3d at 677; see also In re
alleges that Lisa Laser failed to inform it of new products          Laibe, 307 S.W.3d 314; Neal v. Hardee's Food Sys., Inc.,
and failed to offer it a right of first refusal to distribute new    918 F.2d 34 (5th Cir.1990). Further, the forum-selection
products in the United States. Lisa Laser's obligation, if any,      clause itself describes a scope broader that the mere sales
to do so only arises from the Distribution Agreement, in             transactions between Lisa USA and HealthTronics. It states
which Lisa Laser agreed to *885 sell and HealthTronics to            that California shall be the forum “over any dispute arising
buy urological lasers pursuant to certain terms. Those terms         out of this agreement,” not merely any dispute arising out of
are set out both in the body of the Distribution Agreement as        any particular sale.
well as in the Exhibits.




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 Giant Eagle's Motion to Strike                                                                                                Page 33
                                                                                                                             R494
In re Lisa Laser USA, Inc., 310 S.W.3d 880 (2010)
53 Tex. Sup. Ct. J. 624

HealthTronics cites to two Texas court of appeals cases           HealthTronics to distribute new products, failed to provide
in support of its position that the forum-selection clause        HealthTronics information about new products, allowed other
should not apply to its claims—Apollo Property Partners,          distributors to sell products for which HealthTronics was
LLC v. Diamond Houston I, L.P., No. 14–07–00528–CV,               supposed to be the exclusive distributor, and wrongfully
2008 WL 3017549, 2008 Tex.App. LEXIS 5884 (Tex.App.-              terminated the contract. See In re Int'l Profit Assocs. I, 274
Houston [14th Dist.] Aug. 5, 2008, no pet.) and IKON Office       S.W.3d at 678. Accordingly, the trial court erred in refusing
Solutions, Inc. v. Eifert, 2 S.W.3d 688 (Tex.App.-Houston         to enforce the clause in the Texas lawsuit.
[14th Dist.] 1999, no pet.). Both are distinguishable. Apollo
Property Partners is inapposite because the forum-selection        [7] Next, HealthTronics contends that even if the forum-
clause at issue did not clearly mandate an Illinois forum;        selection clause applies to its claims against Lisa USA, it
rather, it merely prevented either party from raising venue       does not apply to claims against Lisa Germany, because the
or personal jurisdiction arguments if an action were filed        plain language of the preamble makes Exhibit F applicable
in Illinois. 2008 WL 3017549 *2–3. IKON Office Solutions          only to “sales by Seller [Lisa USA] to HealthTronics, Inc. ...
is distinguishable because the portion of the sale agreement      pursuant to the Distribution Agreement.” As discussed above,
containing *886 the arbitration clause (an employment             Exhibit F is the default terms and conditions to the sales and
agreement) was an independent, integrated agreement, and          distribution contract between Lisa Laser and HealthTronics.
because the arbitration provision did not broadly require         Because no sales actually occur between Lisa Germany and
arbitration of all disputes between the parties. “[T]he narrow    HealthTronics, it is not surprising that Lisa Germany is not
arbitration clause in this case cover[ed] only disputes related   mentioned in Exhibit F.
to the termination of employment.” IKON Office Solutions,
2 S.W.3d at 696 (emphasis added). Because the fraudulent          HealthTronics's claims against Lisa Germany are for breaches
inducement claims at issue in the case were not related to the    of the right of first refusal and exclusivity clauses in the
termination of the individual's employment, the dispute was       Distribution Agreement. Lisa Germany was a signatory to the
outside the scope of the arbitration clause.                      Distribution Agreement, which incorporated Exhibit F, and
                                                                  HealthTronics seeks to enforce obligations of the contract in
HealthTronics also argues that a change from the original         this lawsuit. A plaintiff “cannot both have his contract and
2005 distribution agreement evidences the parties' intent         defeat it too.” In re Weekley Homes, L.P., 180 S.W.3d 127,
for the forum-selection clause to apply only to sales             135 (Tex.2005). In other words, HealthTronics cannot claim
transaction disputes between HealthTronics and Lisa USA.          that Lisa Germany has obligations to HealthTronics under
The preamble to Exhibit F in the 2005 distribution agreement      the Distribution Agreement and simultaneously claim that the
stated that the standard terms and conditions “apply except       forum-selection clause does not apply to those claims. See
as specifically modified in the Distribution Agreement            also Grigson v. Creative Artists Agency, L.L.C., 210 F.3d
between the parties....” The preamble in the amended, 2007        524, 528 (5th Cir.2000) (holding, in the context of an *887
Distribution Agreement, which is effective for this dispute,      arbitration agreement, that “a signatory to that agreement
states that the terms apply “to sales by [Lisa USA] to            cannot, ... ‘have it both ways': it cannot, on the one hand, seek
HealthTronics, Inc. pursuant to the Distribution Agreement        to hold the non-signatory liable pursuant to duties imposed by
between the parties.” This amendment does not limit the           the agreement, which contains an arbitration provision, but,
forum-selection clause (which continues to state that the         on the other hand, deny arbitration's applicability because the
clause applies to “any disputes” between the parties) but         defendant is a non-signatory”).
merely describes the “standard terms and conditions.” This
amendment is reasonable, considering that Lisa Germany was        Accordingly, reading the forum-selection clause in Exhibit
not a party to the 2005 agreement, but is a party to the 2007     F in context of the whole Agreement, considering that Lisa
Distribution Agreement, and the amendment was necessary           Germany was a signatory to the Distribution Agreement, that
to identify the buyer and the seller.                             the forum-selection clause applies to “any dispute arising out
                                                                  of this agreement,” and that HealthTronics seeks to hold Lisa
HealthTronics's claims arise out of the Agreement rather than     Germany responsible for obligations under the Distribution
other general obligations imposed by law. That is, but for the    Agreement, we conclude that all disputes arising out of the
Agreement, HealthTronics would have no basis to complain          Distribution Agreement against either or both defendants are
that Lisa Germany failed to offer the right of first refusal to   to be litigated in Alameda County, California.



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 Giant Eagle's Motion to Strike                                                                                               Page 34
                                                                                                                            R495
In re Lisa Laser USA, Inc., 310 S.W.3d 880 (2010)
53 Tex. Sup. Ct. J. 624

                                                                     and direct the trial court to vacate its order and grant Lisa
The forum-selection clause at issue in this case governs             Laser's motion to dismiss. We are confident the trial court will
the forum for the dispute between HealthTronics and Lisa             comply, and the writ will issue only if it fails to do so.
Laser, and the trial court abused its discretion in failing to
dismiss the case based on the clause. For these reasons, and
                                                                     All Citations
without hearing oral argument, TEX.R.APP. P. 52.8(c), we
conditionally grant Lisa Laser's petition for writ of mandamus       310 S.W.3d 880, 53 Tex. Sup. Ct. J. 624


Footnotes
1      oHG is short for “offene Handelsgesellschaft” which literally translates to “open trading company.” LANGENSCHEIDT'S
       GERMAN–ENGLISH, ENGLISH–GERMAN DICTIONARY 112, 165 (E. Klatt & G. Golze eds., 1962); MODERN
       DICTIONARY OF INTERNATIONAL LEGAL TERMS 27 (Little, Brown & Co. 1993) (1992). It is the German equivalent
       of a general partnership. E.g., Norbert Meister & Gunner Schuster, Classifying Foreign Entities Investing in Germany,
       2 INT'L TAX REV., July/Aug. 1991, at 42, 42.
2      Before this Court for the first time on appeal, Lisa Laser argues that California law applies to determine whether the
       forum-selection clause is applicable and whether mandamus relief is available to correct the trial court's error, as the
       parties chose California law in the Distribution Agreement. This Court has applied Texas law in the mandamus cases
       in which the parties seek to enforce a forum-selection clause, even if the contract also contains a choice-of-law clause
       selecting the application of another state's substantive law. See, e.g., In re AIU Ins. Co., 148 S.W.3d 109, 111 (Tex.2004)
       (applying Texas law in a mandamus action enforce a forum-selection clause in a contract that also included a choice-
       of-law provision designating New York law); In re Automated Collection Techs., Inc., 156 S.W.3d 557, 558 (Tex.2004)
       (same, Pennsylvania law); In re AutoNation, Inc., 228 S.W.3d 663, 665 (Tex.2007) (same, Florida law); In re Lyon Fin.
       Servs., 257 S.W.3d 228, 230–31 (Tex.2008) (same, Pennsylvania law); In re Int'l Profit Assocs., Inc. (“Int'l Profit Assocs.
       I”), 274 S.W.3d 672, 674 (Tex.2009) (same, Illinois law); In re Int'l Profit Assocs., Inc. (“Int'l Profit Assocs. II”), 286
       S.W.3d 921, 922 (Tex.2009) (same, Illinois law). Further, the determination of whether mandamus relief is available is a
       matter of procedure. The law of the forum state applies to procedural questions. Arkoma Basin Exploration Co. v. FMF
       Assocs. 1990–A, Ltd., 249 S.W.3d 380, 387 & n. 17 (Tex.2008). Accordingly, we apply Texas law in determining whether
       mandamus relief is available in this case.
3      Notwithstanding Lisa Laser's invocation of California law, the parties do not allege that there are any material differences
       between California and Texas law when it comes to interpretation and enforcement of forum-selection clauses. In
       California, as in Texas, (a) the denial of a motion to dismiss or to stay pursuant to a valid forum-selection clause may
       be the basis for mandamus relief; (b) a mandatory forum-selection clause is to be enforced unless it is unreasonable;
       and (c) the plaintiff must shoulder a “heavy burden” to prove unreasonableness, and mere inconvenience and additional
       expense is insufficient. See, e.g., Net2Phone, Inc. v. Superior Court, 109 Cal.App.4th 583, 135 Cal.Rptr.2d 149, 154
       (2003); Olinick v. BMG Entm't, 138 Cal.App.4th 1286, 42 Cal.Rptr.3d 268, 273 (2006); Smith, Valentino & Smith, Inc. v.
       Superior Court, 17 Cal.3d 491, 131 Cal.Rptr. 374, 551 P.2d 1206, 1208–09 (1976).


End of Document                                                  © 2015 Thomson Reuters. No claim to original U.S. Government Works.




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 Giant Eagle's Motion to Strike                                                                                                 Page 35
                                                                                                                              R496
Laserdynamics Inc. v. Acer America Corp., 209 F.R.D. 388 (2002)


                                                                            of validity by establishing that the clause is
                                                                            unreasonable-namely, that the clause is the
                     209 F.R.D. 388
                                                                            synthesis of fraud or coercion.
               United States District Court,
                       S.D. Texas,                                          2 Cases that cite this headnote
                    Houston Division.

            LASERDYNAMICS INC., Plaintiff,                           [3]    Contracts
                    v.                                                          Legal Remedies and Proceedings
 ACER AMERICA CORP., and Acer Communications                                Forum selection clause in software licensing
         & Multimedia America Inc. Defendants.                              agreement which provided “any dispute arising
           Acer America Corp. and Benq Inc.                                 out of this Agreement” would subject to
          Acer Communications & Multimedia                                  exclusive jurisdiction of California state and
          America Inc. Third–Party Plaintiffs,                              federal courts was applicable to third-party
                                                                            claim of licensee seeking indemnity pursuant
          Cyberlink Corp., Intervideo, Inc., and
                                                                            to the agreement for any liability flowing
       Mediamatics, Inc., Third–Party Defendants.
                                                                            from underlying patent infringement suit against
        No. CIV.A.H–01–1745.          |    Aug. 15, 2002.                   licensee, notwithstanding licensee's claim that
                                                                            clause covered only specific licensing or
Patentee brought suit for infringement of patent on DVD                     payment issues.
software. Defendant impled third-party defendant, seeking
indemnity pursuant to a licensing agreement. On third-party                 5 Cases that cite this headnote
defendant's motion to dismiss for improper venue, or to
transfer venue, the District Court, Hoyt, J., held that: (1)         [4]    Contracts
forum selection clause in software licensing agreement which                    Agreement as to Place of Bringing Suit;
provided “any dispute arising out of this Agreement” would                  Forum Selection Clauses
subject to exclusive jurisdiction of California state and federal
                                                                            Forum selection clause in software licensing
courts was applicable to third-party claim, and (2) clause was
                                                                            contract was not unreasonable, where it was
not unreasonable.
                                                                            entered into by sophisticated global business
                                                                            entities, incorporated and licensed to transact
Motion to dismiss granted.
                                                                            business all over the world, and record
                                                                            established that the agreement was entered into
                                                                            freely and without coercion.
 West Headnotes (4)
                                                                            2 Cases that cite this headnote

 [1]     Contracts
             Agreement as to Place of Bringing Suit;
         Forum Selection Clauses                                    Attorneys and Law Firms
         Forum selection clauses carry a presumption of
         validity.                                                   *388 Timothy N Trop, Trop Pruner et al, Houston, TX, for
                                                                    plaintiff.
         2 Cases that cite this headnote
                                                                     *389 Scott F Partridge, Baker & Botts, Paul R Morico,
                                                                    Baker Botts, LLP, Houston, TX, Warren J Krauss, Sedgwick
 [2]     Contracts                                                  Detert et al, James Yuanxin Li, Sedgwick Detert et al, San
             Agreement as to Place of Bringing Suit;                Francisco, CA, for defendants.
         Forum Selection Clauses
         Opponents of a motion to enforce a forum
         selection clause may rebut the presumption



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 Giant Eagle's Motion to Strike                                                                                            Page 36
                                                                                                                          R497
Laserdynamics Inc. v. Acer America Corp., 209 F.R.D. 388 (2002)


                                                                   of California. Mediamatics bulwarks this position by citing
                                                                   various United States Supreme Court and lower court
             MEMORANDUM AND ORDER                                  authority for the proposition that forum selection clauses are
                                                                   presumptively valid. In light of the Supreme Court and lower
HOYT, District Judge.                                              court authority treating forum selection clause enforcement
                                                                   issues, Mediamatics opines that the forum selection clause
I. INTRODUCTION                                                    is neither unreasonable nor overreaching, it does not violate
This case concerns the scope of forum selection clauses and        public policy, and does not deprive Acer of its day in court.
their relationship to Third–Party Practice promulgated under       Further, Mediamatics notes that the parties are sophisticated
Rule 14 of the FEDERAL RULES OF CIVIL PROCEDURE.                   international business entities that freely entered into the
Before the Court is the third-party defendant Mediamatics          agreement.
Inc.'s (“Mediamatics”) motion to dismiss pursuant to 12(b)
(3), or transfer venue pursuant to § 1404. The Court has           As to the manner of disposition, Mediamatics opines that the
reviewed the papers on file and concludes that Mediamatics's       Court is empowered to dismiss Acer's claim under 12(b)(3).
motion to dismiss should be GRANTED.                               In the alternative, Mediamatics argues that the Court should
                                                                   transfer the third-party claim to the appropriate federal court
II. FACTUAL HISTORY                                                in California, pursuant to 28 U.S.C. § 1404(a). 1
In May of 1998, Acer America Corporation and Benq
Inc., (“Acer”) and Mediamatics entered into a licensing
                                                                   B. Acer's Contentions
agreement concerning DVD software. Pursuant to the
                                                                   Acer argues that the parties' forum selection clause does
agreement, Mediamatics licensed its DVD software to Acer,
                                                                   not apply to its Rule 14 action here. Acer interprets the
and promised to indemnify Acer for any patent infringement
                                                                   “disputes arising out of this agreement” language of *390
liability flowing from Acer's use of the DVD software.
                                                                   the forum selection clause to embrace only specific licensing
The Acer–Mediamatics agreement also contains a forum
                                                                   or payment issues between the parties. Acer asserts that there
selection clause that mandates all disputes “arising under [the]
                                                                   is no dispute with Mediamatics as to any licensing or payment
Agreement” be litigated in the state and federal courts of
                                                                   issues between the two parties. Instead, Acer maintains that
California. In the cardinal action, the plaintiff, Laserdynamics
                                                                   its impleader is the natural consequence from the underlying
Inc., is suing Acer, alleging patent infringement of its
                                                                   patent case concerning Mediamatics's DVD software. From
DVD software, listed as Patent No. 6,215,743. As a result,
                                                                   this, Acer concludes that the Laserdynamics lawsuit has
Acer impled Mediamatics in this action, seeking indemnity
                                                                   nothing to do with the Acer–Mediamatics agreement. Acer
from any liability flowing from its underlying case against
                                                                   goes on to note that Mediamatics has a “general obligation
Laserdynamics concerning the DVD software. Mediamatics
moves this Court to dismiss Acer's indemnity claim against         under the law” and the Uniform Commercial Code 2 to
it, arguing that the parties contracted to litigate all matters    indemnify it in this case.
arising from their contract in another forum.
                                                                   Second, Acer contends that the Court should employ its
                                                                   discretion to retain jurisdiction over Acer's third-party claim.
III. CONTENTIONS OF THE PARTIES                                    Even assuming the forum selection cause applies, Acer
                                                                   opines, the forum selection clause is only one factor in the
A. Mediamatics's Contentions
                                                                   Court's consideration to transfer or dismiss this action. Acer
Mediamatics contends that the Court should enforce the
                                                                   maintains that when the Court examines collateral issues
forum selection clause and dismiss the Acer's third-party
                                                                   such as witness convenience and other factors of fundamental
action pursuant to 12(b)(3), because the agreement's forum
                                                                   fairness, judicial economy principles should persuade the
selection clause controls Acer's indemnity claim against
                                                                   Court to deny Mediamatics's motion to dismiss. In reaching
Mediamatics. Mediamatics maintains that Acer's indemnity
                                                                   this result, Acer opines that the Court would avoid the
claim “arises out of the agreement,” because the contract
                                                                   apparent injustice of unduly burdening Acer to litigate the
itself must be interpreted to resolve the question presented.
                                                                   infringement liability issue from both sides-that is, defending
Therefore, the forum selection clause mandates that suits
                                                                   against liability issue in this Court, while conversely
between the parties be litigated under the laws and courts
                                                                   attempting to establish that same infringement liability issue



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 Giant Eagle's Motion to Strike                                                                                               Page 37
                                                                                                                            R498
Laserdynamics Inc. v. Acer America Corp., 209 F.R.D. 388 (2002)


to buttress its indemnity claim against Mediamatics in               of a motion to enforce a forum selection clause may
California.                                                          rebut the presumption by establishing that the clause is
                                                                     unreasonable-namely, that the clause is the synthesis of fraud
Lastly, Acer contends that the Court's retention of the              or coercion. *391 Bremen, 407 U.S. at 12–13, 92 S.Ct.
indemnity claim is essential to preserve Acer's right to             1907. Unreasonableness in this context may be established if
indemnity under the contract. Because of complexity of the           the motion-opponent proves either that the provision is the
case, and the potentially expensive cost of defending and            product of fraud or overreaching. Thus enforcement of the
litigating this action, Acer asserts that the Court should           provision would violate a stout public policy, or “enforcement
not dismiss or transfer the case, because doing so would             of the clause would deprive the plaintiff of his day in court.”
constitute an undue burden upon Acer.                                Bremen, 407 U.S. at 12–13, 92 S.Ct. 1907; Scherk v. Alberto–
                                                                     Culver Co., 417 U.S. 506, 519 n. 14, 94 S.Ct. 2449, 41
                                                                     L.Ed.2d 270 (1974); MacPhail v. Oceaneering Int'l Inc., 170
IV. STANDARD OF REVIEW                                               F.Supp.2d 718, 726 (S.D.Tex.2001).

Motions to Dismiss Pursuant to Rule 12(b)(3)
                                                                      [3] In the instant case, Acer argues that the forum selection
FEDERAL RULE oF CIVIL PROCEDURE 12(b)(3) permits
                                                                     clause does not apply to its indemnity action against
a defendant to move to dismiss an action on the basis of
                                                                     Mediamatics. In addition, Acer advances the position that the
improper venue. Frietsch v. Refco, Inc., 56 F.3d 825, 830 (7th
                                                                     Court should narrowly construe the forum selection clause to
Cir.1995) Richards v. Lloyd's of London, 135 F.3d 1289, 1292
                                                                     cover only specific licensing or payment issues. The Court
(9th Cir.1998); Lipcon v. Underwriters at LLoyd's, London,
                                                                     disagrees with Acer's interpretation of the forum selection
148 F.3d 1285, 1290 (11th Cir.1998); Psarros v. Avior
                                                                     clause. The relevant language of the forum selection clause
Shipping, Inc., 192 F.Supp.2d 751, 752–53 (S.D.Tex.2002).
                                                                     provides: “Any dispute arising out of this Agreement shall be
The majority of the courts conform to the standard that
                                                                     subject to the exclusive jurisdiction of the state and federal
once a defendant has raised the improper venue issue by
                                                                     courts of California, and the parties hereby consent to the
motion, the burden of sustaining venue rests with the plaintiff.
                                                                     jurisdiction of such courts.”
McCaskey v. Continental Airlines Inc., 133 F.Supp.2d 514,
523 (S.D.Tex.2001); Bigham v. Envirocare of Utah, Inc., 123
                                                                      [4] The word “arising” connotes and denotes an origin
F.Supp.2d 1046, 1048 (S.D.Tex.2000). In the absence of an
                                                                     or genesis of a thing. It follows that the parties intended
evidentiary hearing on the matter, courts will allow a plaintiff
                                                                     that those disputes that arise under the Acer–Mediamatics
to carry the burden by establishing facts, taken as true, that
                                                                     agreement be litigated in the manner proscribed by the
establish venue. McCaskey, 133 F.Supp.2d at 523; Bigham,
                                                                     forum selection clause. The Acer–Mediamatics agreement
123 F.Supp.2d at 1048; Wilson v. Belin, 20 F.3d 644, 648
                                                                     has “patent licensing” as its nucleus. In other words, the spirit
(5th Cir.1994). The Court will accept uncontroverted facts
                                                                     of the Acer–Mediamatics agreement contemplates the rights
contained in the Plaintiff's pleadings as true, and resolve
                                                                     and duties of the parties concerning the DVD software. If
any conflicts in the parties' documents and affidavits in the
                                                                     any right or obligation in the Acer–Mediamatics agreement
Plaintiff's favor. McCaskey, 133 F.Supp.2d at 523. While
                                                                     is threatened or impaired by an act of the parties or their
a defendant need not affirmatively disprove all bases for a
                                                              privities, that act gives rise to a dispute under the agreement. 3
plaintiff's choice of venue, courts will provide the plaintiff the
                                                              See Marinechance Shipping, Ltd. v. Sebastian, 143 F.3d
benefit of the doubt in ascertaining the controlling facts. Id.
                                                              216, 222–23 (5th Cir.1998). Moreover, Acer's arguments
                                                              concerning systemic fairness do not carry its heavy burden
V. ANALYSIS                                                   to rebut the presumption of the forum selection clause's
 [1]    [2] Federal law controls the Court's examination enforceability. See M/S Bremen v. Zapata Off–Shore Co.,
concerning the enforceability of a forum selection clause.    407 U.S. 1, 15, 92 S.Ct. 1907, 32 L.Ed.2d 513 (1972). This
Haynsworth v. The Corp., 121 F.3d 956, 962 (5th Cir.1997).    contract was entered into by sophisticated global business
The United States Supreme Court has held that forum           entities, incorporated and licensed to transact business all
selection clauses carry a presumption of validity. M/S Bremen over the world. The record establishes that the Acer–
v. Zapata Off–Shore Co., 407 U.S. 1, 15, 92 S.Ct. 1907,       Mediamatics agreement was entered into freely and without
32 L.Ed.2d 513 (1972); see also Mitsui & Co. (USA),           coercion. Fairness, in this action, mandates enforcement of
Inc. v. MIRA M/V, 111 F.3d 33 (5th Cir.1997). Opponents       the Acer–Mediamatics agreement.



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                                                                                                                              R499
Laserdynamics Inc. v. Acer America Corp., 209 F.R.D. 388 (2002)




Acer has not met its “heavy burden” to rebut the presumption            After weighing the validity of Acer's contentions, the Court
that the forum selection clause is reasonable. This contract            finds no compelling justification to avoid enforcement of
is not the product of fraud or overreaching. The Court finds            Acer's forum selection clause. To do otherwise would
that enforcing the forum selection clause in this matter neither        contravene the spirit of contract law. This Court has long
frustrates a stout public policy, nor deprives Acer of its day          adhered to the legal maxim, pacta sunt servanda: Agreements
in court. Acer notes that our policy of “systemic integrity             of the parties must be observed. This resolution also furthers
and fairness” warrants the Court's retention of Acer's third-           a co-existing judicial policy goal that every party should be
party claim. The Court disagrees with Acer's use of that                duly afforded the opportunity to address his disputes and
policy premise. Acer's third party claim is for indemnity. The          independent grievances in a just manner. See F ED. R. CIV.
indemnity claim is one that requires a condition precedent              P. 1. Therefore, the Court finds that the forum selection clause
                                                                        of the Acer–Mediamatics agreement applies and should be
before the right is truly implicated: an adjudicative finding
of liability upon the benefactor of the indemnity clause. See           enforced.

BLACK'S LAW DICTIONARY 772 (7th ed.1999). 4 Acer is
free to litigate the indemnity issue once this matter is resolved       VI. CONCLUSION
or re-file its claim in California upon the final judgment of           In light of the discussion above, and pursuant to the discretion
Mediamatics's motion. Although Rule 14 permits defendants               allotted this Court by Rule 14 of the FEDERAL RULES OF
to implead parties that may be primarily or secondarily liable          CIVIL PROCEDURE, the Court GRANTS the Third–Party
on the plaintiff's claim, the same Rule enables our federal             Defendant's motion to dismiss Acer's third-party indemnity
courts with the necessary 5 discretion to avoid the potential           claim against Mediamatics WITHOUT PREJUDICE.
pitfalls of complex multi-party litigation. *392 FED. R.
CIV. P. 14; see also Dery v. Wyer, 265 F.2d 804 (2nd                    It is so ORDERED.
Cir.1959); Florida East Coast Railway Co. v. United States,
519 F.2d 1184 (5th Cir.1975). Hence, the Court exercises its
                                                                        All Citations
discretionary authority to dismiss Acer's third-party action,
pursuant to Rule 12(b)(3) of the FEDERAL RULES OF                       209 F.R.D. 388
CIVIL PROCEDURE.


Footnotes
1       Rule 12(b)(3) and 28 U.S.C. § 1404(a) have been employed by courts to enforce forum selection clauses. See
        International Software Sys. v. Amplicon, Inc., 77 F.3d 112, 113 (5th Cir.1996); Lafargue v. Union Pacific Railroad, 154
        F.Supp.2d 1001 (S.D.Tex.2001). The Fifth Circuit has not squarely addressed the procedural method to dismiss cases
        on the basis on enforcing a forum selection clause; however, in Mitsui & Co. (USA), Inc. v. MIRA M/V, 111 F.3d 33 (5th
        Cir.1997), the Court affirmed the District Court's decision to dismiss a lawsuit that employed 12(b)(3) as its basis. Based
        on the rationale articulated below, the Court need not consider Mediamatics's alternative motion to transfer venue.
2       In its reply to this premise, Mediamatics points out that the relative U.C.C. provision applies in absence of an agreement
        to indemnify. See CAL. COM. CODE § 2312(3) (West 2001).
3       It must be noted that Acer cannot “have its cake and eat it too”-by arguing the inapplicability of the forum selection clause
        in its reply to Mediamatics's motion to dismiss while using the same clause as its basis for the lawsuit in its Third–Party
        Complaint.
4       BLACK'S defines indemnity as “[a] duty to make good any loss, damage, or liability incurred by another.”
5       Nor does this Court opine that Acer would suffer an undue financial burden by litigating this matter in its contract's forum
        subsequent to, or concurrently with, the instant case. If Acer is found liable in the underlying lawsuit, its indemnity right
        becomes a matter of contract interpretation by the California courts.


End of Document                                                     © 2015 Thomson Reuters. No claim to original U.S. Government Works.




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53 Tex. Sup. Ct. J. 363


                                                                      2 Cases that cite this headnote
                     304 S.W.3d 371
                 Supreme Court of Texas.
                                                                [2]   Mandamus
   In re ADM INVESTOR SERVICES, INC., Relator.                           Remedy by Appeal or Writ of Error
                                                                      Mandamus
             No. 08–0570.       |   Feb. 19, 2010.
                                                                         Nature of acts to be commanded
Synopsis                                                              Mandamus will issue if the relator establishes a
Background: Futures commission merchant filed petition                clear abuse of discretion for which there is no
for writ of mandamus, seeking relief from order of the                adequate remedy by appeal.
354th District Court, Rains County, Richard A. Beacom,
Jr., J., denying its motion to dismiss on basis of mandatory          Cases that cite this headnote
forum selection clause investor's action for fraud, breach of
fiduciary duty, and negligence. The Court of Appeals, James     [3]   Contracts
T. Worthen, C.J., 257 S.W.3d 817, denied petition. Merchant               Legal remedies and proceedings
appealed.                                                             Party waives a forum-selection clause by
                                                                      substantially invoking the judicial process to the
                                                                      other party's detriment or prejudice; there is a
Holdings: The Supreme Court, Green, J., held that:                    strong presumption against such waiver.

                                                                      10 Cases that cite this headnote
[1] merchant did not waive enforcement of forum selection
clause;
                                                                [4]   Contracts
[2] merchant's broker did not waive forum selection clause on             Legal remedies and proceedings
merchant's behalf; and                                                Merely participating in litigation does not
                                                                      categorically mean the party has invoked the
[3] trial court abused it discretion by refusing to enforce           judicial process so as to waive enforcement of
forum-selection clause.                                               forum selection clause.

                                                                      4 Cases that cite this headnote
Petition conditionally granted with directions.

Willett, J., concurred and filed opinion.                       [5]   Contracts
                                                                          Legal remedies and proceedings
                                                                      Waiver of forum selection clause can be implied
                                                                      from a party's unequivocal conduct, but not by
 West Headnotes (15)
                                                                      inaction.

                                                                      6 Cases that cite this headnote
 [1]    Contracts
            Legal remedies and proceedings
        Futures commission merchant did not waive               [6]   Contracts
        enforcement of forum selection clause in                          Legal remedies and proceedings
        agreement with investor by simultaneously filing              Futures commission merchant's approximately
        answer to complaint and motion to transfer venue              three-month delay in requesting a hearing on
        with motion to dismiss; merchant fell far short of            motion to dismiss was not waiver of forum
        invoking judicial process to investor's detriment             selection clause in agreement with investor;
        or prejudice.                                                 despite delay, merchant did nothing unequivocal
                                                                      to waive enforcement.



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53 Tex. Sup. Ct. J. 363

                                                                      merchant in investor's action against merchant
        1 Cases that cite this headnote                               for fraud, breach of fiduciary duty, and
                                                                      negligence; investor failed to meet her heavy
 [7]    Brokers                                                       burden to establish that enforcing the forum-
            Contracts in general                                      selection clause would be unreasonable, unjust,
                                                                      or seriously inconvenient.
        Futures commission merchant's broker did not
        waive on merchant's behalf forum selection                    11 Cases that cite this headnote
        clause in investor's action against merchant
        and broker for fraud, breach of fiduciary duty,
        and negligence; nothing in record suggested            [11]   Contracts
        either that scope of any agency relationship                      Agreement as to place of bringing suit;
        between merchant and broker encompassed                       forum selection clauses
        actual authority to waive forum-selection clause              Trial court abuses its discretion in refusing
        during litigation, or that merchant communicated              to enforce a forum-selection clause unless
        to investor that broker would have such                       the party opposing enforcement of the clause
        authority.                                                    can clearly show that: (1) enforcement would
                                                                      be unreasonable or unjust, (2) the clause is
        Cases that cite this headnote                                 invalid for reasons of fraud or overreaching, (3)
                                                                      enforcement would contravene a strong public
 [8]    Principal and Agent                                           policy of the forum where the suit was brought,
            Implied Agency                                            or (4) the selected forum would be seriously
                                                                      inconvenient for trial.
        Principal and Agent
            Implied and Apparent Authority                            16 Cases that cite this headnote
        An agent's authority to act on behalf of a
        principal depends on some communication by
                                                               [12]   Contracts
        the principal either to the agent, actual or express
                                                                          Agreement as to place of bringing suit;
        authority, or to the third party, apparent or
                                                                      forum selection clauses
        implied authority.
                                                                      Contracts
        3 Cases that cite this headnote                                   Presumptions and burden of proof
                                                                      Burden of proof is heavy for the party
 [9]    Principal and Agent                                           challenging enforcement of forum selection
            Contracts in General                                      clause; when inconvenience in litigating in the
                                                                      chosen forum is foreseeable at the time of
        Because an agent's authority is presumed to be
                                                                      contracting, the challenger must show that trial in
        co-extensive with the business entrusted to his
                                                                      the contractual forum will be so gravely difficult
        care, it includes only those contracts and acts
                                                                      and inconvenient that he will for all practical
        incidental to the management of the particular
                                                                      purposes be deprived of his day in court.
        business with which he is entrusted.
                                                                      13 Cases that cite this headnote
        Cases that cite this headnote

                                                               [13]   Action
 [10]   Contracts
                                                                           Claims Arising Out of Same Transaction or
            Agreement as to place of bringing suit;
                                                                      Transactions Connected with Same Subject of
        forum selection clauses
                                                                      Action
        Trial court abused its discretion by refusing
                                                                      Action
        to enforce forum-selection clause in agreement
                                                                           Joint or Common Liability of Defendants
        between investor and futures commission



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        Mere existence of another defendant does not             we conditionally grant the relator's petition *373 for writ of
        compel joint litigation, even if the claims arise        mandamus and order the trial court to dismiss the case as to
        out of the same nucleus of facts.                        the relator.

        Cases that cite this headnote

                                                                                               I
 [14]   Contracts
            Agreement as to place of bringing suit;              Jetta Prescott executed an agreement in 2001 with ADM
        forum selection clauses                                  Investor Services, Inc., allowing ADM to trade commodities
        Conclusory statements that investor's health             on Prescott's behalf. Texas Trading Company Incorporated
        concerns would preclude her from litigating              acted as a broker and guarantor in the transaction. When
        case in two different states were insufficient           Prescott's account balance reached a deficit greater than
        to establish inconvenience sufficient to avoid           $50,000.00, ADM was authorized to close her account
        enforcement of forum-selection clause.                   and collect the deficit from Texas Trading. In early 2004,
                                                                 Prescott's balance reached a deficit of $57,844.29. ADM
        1 Cases that cite this headnote                          closed her account and collected the deficit from Texas
                                                                 Trading's CEO, Charles Dawson. Dawson filed suit in his
                                                                 individual capacity in Hopkins County against Prescott and
 [15]   Contracts
                                                                 obtained a judgment against her.
            Agreement as to place of bringing suit;
        forum selection clauses
                                                                 Prescott then sued both Texas Trading and ADM in Rains
        Bright-line test for avoiding enforcement of
                                                                 County, alleging several legal theories including fraud,
        forum-selection clauses has not been established.
                                                                 breach of fiduciary duty, and negligence. Texas Trading
        6 Cases that cite this headnote                          simultaneously filed an answer and a motion to transfer venue
                                                                 to Hopkins County. ADM responded to the suit by filing an
                                                                 answer, a motion to dismiss, and, alternatively, a motion to
                                                                 transfer venue to Hopkins County. ADM's motion to dismiss
                                                                 relied on the choice-of-law and forum-selection clause in its
Attorneys and Law Firms
                                                                 agreement with Prescott, which reads:
*372 J. Brad McCampbell, Curtis Alexander McCampbell
                                                                             All actions or proceedings arising
& Morris PC, Emory, TX, for relator.
                                                                             directly, indirectly or otherwise in
Michael Jason Forni, Law Office of Mike Forni, Thomas L.                     connection with, out of, related to,
Kapioltas, Kapioltas & Forni, PLLC, Dallas, TX, for real                     or from this Agreement or any
party in interest.                                                           transaction covered hereby shall be
                                                                             governed by the law of Illinois and
John W. Alexander, Alexander & Boswell, Winnsboro, TX,                       may, at the discretion and election of
for Texas Trading Company Incorporated.                                      [ADM], be litigated in courts whose
                                                                             situs in [sic] within Illinois.
Opinion

Justice GREEN delivered the opinion of the Court.                A hearing was set for Texas Trading's motion to transfer
                                                                 venue. ADM acknowledged the setting for this hearing in a
In this case, we consider whether the trial court abused its     letter to Prescott's counsel, but then elected not to appear so
discretion by denying a motion to dismiss premised on a          as to avoid potentially waiving its motion to dismiss. Instead,
forum-selection clause. We conclude that it did. The real        approximately three months after filing its answer and motion
party in interest did not overcome the presumption against       to dismiss, ADM requested a separate hearing on its motion
the relator's waiving its right to enforce the forum-selection   to dismiss. After the hearing on Texas Trading's motion to
clause, or satisfy her burden to demonstrate that enforcing      transfer venue, the trial court granted that motion. The trial
the clause would be unreasonable and unjust. Accordingly,        court later conducted a hearing on ADM's motion to dismiss,



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which it denied. The trial court explained its reasoning in a     not categorically mean the party has invoked the judicial
letter, stating that although the forum-selection clause would    process so as to waive enforcement. Automated, 156 S.W.3d
be enforceable if ADM were the lone defendant, “[i]t seems        at 559–60. Waiver can be implied from a party's unequivocal
unreasonable to the Court for Plaintiff to have to pursue the     conduct, but not by inaction. See Perry Homes, 258 S.W.3d
same cause of action against two defendants in two different      at 593.
states.” Nothing in the record before us indicates whether
the trial court ruled on ADM's motion to transfer venue to         [6] We disagree with the court of appeals that ADM
Hopkins County, where Prescott's claims remain pending            waived enforcement. Simultaneously filing an answer and
against Texas Trading. The court of appeals denied ADM's          motion to transfer venue with a motion to dismiss falls short
petition for writ of mandamus on the alternative ground that      of substantially invoking the judicial process to Prescott's
ADM waived enforcement. 257 S.W.3d 817, 822 (Tex.App.-            detriment or prejudice. Indeed, in both AIU and Automated,
Tyler 2008).                                                      the defendants participated in the litigation process much
                                                                  more substantially. See AIU, 148 S.W.3d at 121 (defendant
                                                                  filed answer and request for jury before filing its motion
                                                                  to dismiss); Automated, 156 S.W.3d at 558–60 (defendant
                              II
                                                                  filed answer with counterclaims and served substantial
 [1] Prescott primarily argues to us that ADM waived              discovery requests before filing its motion to dismiss). ADM's
enforcement by failing to request a hearing sooner or appear      approximately three-month delay in requesting a hearing also
at the hearing on Texas Trading's motion to transfer venue,       does not compel us to find waiver. We do not consider
which prevented the trial court from being able to determine      the length of any delay separate from the totality of the
the proper forum for the entire case to be heard. Prescott        circumstances. See Perry Homes, 258 S.W.3d at 595–97.
also argues that Dawson, as ADM's agent, waived the forum-        Here, despite the gap between filing and requesting a hearing,
selection clause by his earlier lawsuit against Prescott, and     ADM did nothing “unequivocal” to waive enforcement. See
that Texas Trading, as ADM's agent, waived the clause by          id. at 593. Moreover, we have considered comparable delays
moving to transfer venue. In the alternative, Prescott argues     before without finding waiver. See AIU, 148 S.W.3d at 121
that it would be unreasonable or unjust to enforce the forum-     (five-month delay); Automated, 156 S.W.3d at 558 (four-
selection clause.                                                 month delay).


 [2] Mandamus will issue if the relator establishes a clear       [7] [8] [9] We also reject any agency theory that holds
abuse of discretion for *374 which there is no adequate          ADM as waiving enforcement because of the actions taken by
remedy by appeal. In re Prudential Ins. Co. of Am., 148          Texas Trading, an initial co-defendant, or its CEO, Dawson.
S.W.3d 124, 135–36 (Tex.2004). We have consistently              “An agent's authority to act on behalf of a principal depends
granted petitions for writ of mandamus to enforce forum-         on some communication by the principal either to the agent
selection clauses because a trial court that improperly refuses  (actual or express authority) or to the third party (apparent
to enforce such a clause has clearly abused its discretion. See  or implied authority).” Gaines v. Kelly, 235 S.W.3d 179,
In re AIU Ins. Co., 148 S.W.3d 109, 114–15 (Tex.2004).           182 (Tex.2007). “Because an agent's authority is presumed
                                                                 to be co-extensive with the business entrusted to his care,
 [3] [4] [5] A party waives a forum-selection clause by it includes only those contracts and acts incidental to the
substantially invoking the judicial process to the other party's management of the particular business with which he is
detriment or prejudice. In re Automated Collection Techs.,       entrusted.” Id. at 185. Nothing in the record suggests that
Inc., 156 S.W.3d 557, 559 (Tex.2004) (per curiam); see also      the scope of any agency relationship between ADM and
AIU, 148 S.W.3d at 121. There is a strong presumption            Texas Trading, its broker, encompasses the actual authority to
against such waiver. See Perry Homes v. Cull, 258 S.W.3d         waive the forum-selection clause during litigation. Likewise,
580, 590 (Tex.2008) (observing strong presumption against        nothing suggests that ADM communicated to Prescott that
waiver of arbitration clause); Automated, 156 S.W.3d at 559      Texas Trading would have such authority.
(stating that waiver in arbitration clause context is analogous
to forum-selection clauses). In Perry Homes, we adopted           [10]    [11]    [12] Prescott has also failed to establish an
a test considering the totality of the circumstances. 258        exception  under which the trial court's refusal to enforce the
S.W.3d at 596. But merely participating in litigation does       forum-selection   *375 clause would be permissible. A trial



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court abuses its discretion in refusing to enforce a forum-         Texas Trading's motion to transfer venue to Hopkins County.
selection clause unless the party opposing enforcement of           Prescott swore that she was nearing the age of 80, suffered
the clause can clearly show that (1) enforcement would be           chronic health problems including fibromyalgia and heart
unreasonable or unjust, (2) the clause is invalid for reasons of    problems, often had difficulty walking, and had been
fraud or overreaching, (3) enforcement would contravene a           hospitalized several times in recent months. Prescott believed
strong public policy of the forum where the suit was brought,       that her “case will be severely prejudiced if transferred to
or (4) the selected forum would be seriously inconvenient           Hopkins County.” Although we are sympathetic to Prescott's
for trial. In re Lyon Fin. Servs., Inc., 257 S.W.3d 228, 231–       health concerns, the record does not establish that requiring
32 (Tex.2008) (per curiam). The burden of proof is heavy            her to pursue her claims against ADM in Illinois, the forum
for the party challenging enforcement. AIU, 148 S.W.3d at           to which she agreed in 2001, would be unreasonable or
113. When inconvenience in litigating in the chosen forum           unjust. Further, even assuming that health concerns could
is foreseeable at the time of contracting, the challenger           render a selected forum sufficiently inconvenient to preclude
must “show that trial in the contractual forum will be so           enforcement of a forum-selection clause, we believe that
gravely difficult and inconvenient that he will for all practical   Prescott's conclusory statements are insufficient to establish
purposes be deprived of his day in court.” Id. (quoting M/S         such inconvenience. Cf. Lyon, 257 S.W.3d at 234 (“If merely
Bremen v. Zapata Off–Shore Co., 407 U.S. 1, 18, 92 S.Ct.            stating that *376 financial and logistical difficulties will
1907, 32 L.Ed.2d 513 (1972)); see also Lyon, 257 S.W.3d at          preclude litigation in another state suffices to avoid a forum-
234 (“By entering into an agreement with a forum-selection          selection clause, the clauses are practically useless.”). 1
clause, the parties effectively represent to each other that the
agreed forum is not so inconvenient that enforcing the clause        [15] By allowing for exceptions when enforcement of
will deprive either party of its day in court, whether for cost     forum-selection clauses would be unreasonable or unjust,
or other reasons.”).                                                or seriously inconvenient, we, as the Supreme Court in
                                                                    M/S Bremen, have recognized that there may be extreme
 [13]     Prescott failed to meet her heavy burden to               circumstances that courts cannot presently anticipate or
establish that enforcing the forum-selection clause will            foresee; but we have not established a bright-line test for
be unreasonable or unjust, or seriously inconvenient. The           avoiding enforcement of forum-selection clauses. See M/S
mere existence of another defendant does not compel joint           Bremen, 407 U.S. at 17, 92 S.Ct. 1907 (speculating that
litigation, even if the claims arise out of the same nucleus        exceptional circumstances could exist such as a forum-
of facts. See In re Int'l Profit Assocs., Inc., 274 S.W.3d          selection clause in a contract of adhesion, or a controversy
672, 680 (Tex.2009) (per curiam) (“If all it takes to avoid a
                                                                    that the parties could never have had in mind). 2 We have
forum-selection clause is to join as defendants local residents
                                                                    consistently refused to close the door to the possibility that
who are not parties to the agreement, then forum-selection
                                                                    exceptional circumstances could exist, even as we have
clauses will be of little value.”). Indeed, as the case reaches
                                                                    chosen not to confront them in particular cases. See, e.g.,
us, the trial court already separated the case, isolating ADM
                                                                    Int'l Profit Assocs., 274 S.W.3d at 679–80; Lyon, 257 S.W.3d
as a defendant in Prescott's suit in Rains County. Still,
                                                                    at 231–32; Michiana Easy Livin' Country, Inc. v. Holten,
our conclusion would not differ even if ADM and Texas
                                                                    168 S.W.3d 777, 793 (Tex.2005). Here, though, we need not
Trading were co-defendants in a single forum. Nothing in
                                                                    elaborate on these exceptions any further because the sparse
the record establishes that Prescott could not proceed in
                                                                    record in this mandamus case does not demonstrate such
Illinois. Moreover, while a trial in Texas is undoubtedly more
                                                                    exceptional circumstances.
convenient for a Texas resident, Prescott failed to prove that
a trial in Illinois would deprive her of her day in court. See
Lyon, 257 S.W.3d at 234. Prescott's circumstances here are
thus not sufficient to meet the heavy burden she has to avoid                                     III
a forum-selection clause. See AIU, 148 S.W.3d at 113.
                                                                    We conclude that Prescott did not overcome the presumption
 [14] We observe that Prescott asserted in her brief to this        against ADM's waiving its right to enforce the forum-
Court that her “health will prevent her from prosecuting            selection clause by showing that ADM substantially invoked
her claims in two different states.” The record shows that          the judicial process. We also conclude that Prescott failed
Prescott presented an affidavit to the trial court, opposing        to satisfy her burden to demonstrate that enforcement of the
                                                                    forum-selection clause would be unjust and unreasonable.


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Accordingly, we hold that the trial court abused its discretion   Boiled down, a party opposing a forum-selection clause bears
in denying ADM's motion to dismiss. There is no adequate          a “heavy burden” 2 of proving a heavy burden—that trial
remedy by appeal when a trial court refuses to enforce a          in the chosen forum would be unjustly onerous. And if
forum-selection clause. In re Pirelli Tire, L.L.C., 247 S.W.3d    the assertion is health-related, a health professional should
670, 679 (Tex.2007). For these reasons, without hearing oral      do the asserting. In my view, first-party patient testimony
argument, TEX. R. APP. P. 52.8(c), we conditionally grant         is insufficient (though perhaps not always necessary), and
ADM's petition for writ of mandamus and direct the trial court    third-party provider testimony is necessary (though perhaps
to vacate its February 11, 2008 order and grant ADM's motion      not always sufficient). Specifically, a competent medical
to dismiss. We are confident the trial court will comply, and     provider should attest that the patient's condition makes travel
the writ will issue only if it fails to do so.                    to the agreed forum not merely inconvenient or impracticable,
                                                                  but medically prohibited. This is the approach adopted in
                                                                  a recent federal-court case involving an 81–year–old New
Justice WILLETT filed a concurring opinion.                       York resident who broke her hip on a cruise ship and argued
                                                                  “inconvenience” to defeat transfer of her personal-injury
                                                                  suit to Washington State under a forum-selection clause. 3
Justice WILLETT, concurring.
                                                                  Both the plaintiff and her orthopedic surgeon described
I join the Court's result and write separately only to add
                                                                  her condition, the surgeon testifying she could tolerate a
a brief word on the evidentiary burden borne by a party
                                                                  plane flight, although it would be difficult and she would
asserting medical hardship to escape a forum-selection clause,
an issue of first impression in this Court. Also, while today's   suffer discomfort. 4 The court held that while this plaintiff
case is a sub-par vehicle given its slim record, I believe        failed to make the requisite showing—she proved only that
the Court should one day clarify something else in medical-       travel would be unpleasant, not unfeasible—a plaintiff whose
hardship cases: the meaning of phrases like “seriously            physical limitations bar travel can satisfy the heavy burden
inconvenient” and “unreasonable or unjust”—two of the             of proof required to set aside a forum-selection clause on
bases for avoiding a forum-selection clause—and, relatedly,       grounds of inconvenience. 5 If health concerns are ever held
whether physical ailments can qualify as *377 “special            to preclude enforcement, this type of proof, at minimum,
and unusual circumstances” sufficient to defeat enforcement.      seems necessary.
Actions to enforce forum-selection clauses arrive at the Court
via mandamus, and it seems unfair to conclude a lower court
clearly abused its discretion by acting without reference to      2. In a forum-selection clause case involving a medically
guiding principles if the principles they must reference supply   infirm party, what do “seriously inconvenient” and
scant guidance.                                                   “unreasonable or unjust” mean?

                                                                  A litigant may defeat enforcement of a forum-selection clause
1. What sort of health-related evidence would suffice to          by showing one of four things:
escape a forum-selection clause?
                                                                    (1) enforcement would be unreasonable or unjust,
I agree that Jetta Prescott's affidavit detailing her myriad
                                                                     *378 (2) the clause is invalid for reasons of fraud or
health woes is, standing alone, insufficient to avoid the
                                                                      overreaching,
contracted-for forum. The lesson of In re Lyon, as the Court
notes, is that the mere assertion of “financial and logistical      (3) enforcement would contravene a strong public policy
difficulties” is not enough to negate a forum-selection clause,        of the forum where the suit was brought, or
lest such clauses become “practically useless.” 1 Ease of
evasion is certainly no less a concern when the claimed             (4) the selected forum would be seriously inconvenient for
hardship is physical rather than financial. So I agree that a          trial. 6
party asserting medical infirmities must offer more than her
own testimony.                                                    Today's case focuses on grounds (1) and (4) above, and while
                                                                  I understand that the slender record makes this case a less-
I would go a step further, however, and make clear for            than-ideal vehicle for extended analysis, I believe we should
the bench and bar what sort of evidence would suffice.


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                                                                    of severe medical ailments constitute “special and unusual
one day explain more fully how these rather opaque phrases
apply to assertions of medical hardship.                            circumstances” in certain cases?


Most Texas cases avoid fleshing out the term “seriously             The Court never mentions this “special and unusual
inconvenient”; the only discernible “definition” seems to           circumstances” basis for negating a forum-selection clause,
                                                                    but that is immaterial here. Mrs. Prescott's only evidence
emerge from piecing together examples of what various
                                                                    of post-contract medical problems is her lone affidavit,
courts have held not to be seriously inconvenient. 7 Many
                                                                    which even if wholly persuasive, is wholly insufficient.
cases recite the general standard from M/S Bremen v. Zapata
                                                                    Accordingly, we need not consider the affidavit's substance
Off–Shore Co., 8 essentially that “a forum clause ... may           (or lack thereof) and whether Mrs. Prescott's ailments qualify
[ ] be ‘unreasonable’ and unenforceable if the chosen               as “special and unusual circumstances.”
forum is seriously inconvenient for the trial of the action,”
and conclude the party's proof fell short. 9 None of the            In sum, this Court has never addressed, nor has any Texas
cases, however, are medical-hardship cases; today's case            appellate court, whether medical concerns can negate a
is the first, meaning Texas courts have no guidance for             forum-selection clause. Given the ubiquity of such clauses
discerning the confusing, but apparently consequential, line        in everyday contracts, both commercial and consumer, I
between “inconvenient” (clause enforced) and “seriously             hope a future case with a more-developed record gives
inconvenient” (clause evaded) ... *379 not to mention what          us an opportunity to clarify how the various bases for
separately qualifies as “unreasonable or unjust” in the context     avoiding enforcement apply when a party asserts serious
of someone asserting health maladies that arose after the           medical hardship. This seems only fair. Actions to enforce
clause was adopted.                                                 forum-selection clauses reach us via mandamus, 13 a remedy
                                                                    “controlled largely by equitable principles,” 14 and we must
Cases involving medical hardship strike me as somewhat
                                                                    determine if the court below clearly abused its discretion
unique. Financial or logistical burdens may be easily
                                                                    in denying enforcement. It seems inequitable to fault lower
anticipated; not so with many medical burdens. 10 The Court         courts for acting without reference to guiding principles if
notes that when a forum's inconvenience is foreseeable at           there are few on-point principles to be referenced.
the time of contracting, the party opposing enforcement
must “show that trial in the contractual forum will be so           I understand why the Court declines to use today's imperfect
gravely difficult and inconvenient that he will for all practical   case to dive deeper and provide greater specificity for forum-
purposes be deprived of his day in court.” 11 True, but in          selection cases involving medical hardship, *380 but I hope
conducting that analysis we must also confront what we              a future case will give us occasion to say more.
confirmed just last year: a party asserting inconvenience
can avoid enforcement by proving that “special and unusual
                                                                    All Citations
circumstances developed after the contracts were executed”
such that litigation in the chosen forum would work a               304 S.W.3d 371, 53 Tex. Sup. Ct. J. 363
deprivation of its day in court. 12 So can exacting evidence


Footnotes
1       In considering the circumstances of this case, we offer no opinion as to whether, in a different case, health concerns
        might be sufficient grounds to preclude enforcement of a forum-selection clause, or what sort of proof of such health
        concerns would be required.
2       The Supreme Court clarified in Carnival Cruise Lines, Inc. v. Shute that its use of “serious inconvenience of the contractual
        forum” in M/S Bremen was in the context of a hypothetical agreement between two Americans to resolve a local dispute
        in a remote alien forum, not an agreement to resolve the dispute in another state. 499 U.S. 585, 594, 111 S.Ct. 1522,
        113 L.Ed.2d 622 (1991).
1       In re Lyon Fin. Servs., Inc., 257 S.W.3d 228, 234 (Tex.2008) (per curiam).
2       In re AIU Ins. Co., 148 S.W.3d 109, 113 (Tex.2004).




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In re ADM Investor Services, Inc., 304 S.W.3d 371 (2010)
53 Tex. Sup. Ct. J. 363

3      See Caputo v. Holland Am. Line, Inc., No. 08–CV–4584, 2009 WL 2258326 (E.D.N.Y. July 29, 2009) (stating an 81–
       year–old plaintiff whose recent hip surgery made her unable to walk alone or sit for extended periods could have made
       the requisite showing if she had shown she was physically unable to fly to the selected forum).
4      Id. at *1–2.
5      Id. at *4.
6      Lyon, 257 S.W.3d at 231–32. Despite the disjunctive “or,” which signals textual separateness, we seemed to intermingle
       grounds (1) and (4) in In re Lyon, asking “whether Pennsylvania is such an inconvenient forum that enforcing the forum-
       selection clause would produce an unjust result.” Id. at 233.
7      See, e.g., In re Int'l Profit Assocs., Inc., 274 S.W.3d 672, 679, 680 (Tex.2009) (per curiam) (holding that even though
       plaintiff may have to pursue two suits, one in Illinois and one in Texas, that is not the type of unusual and special
       circumstances that shows litigating in the contracted-for forum would be so gravely difficult and inconvenient that plaintiff
       would be deprived of its day in court; also, Illinois is not a remote alien forum for purposes of forum-selection agreements);
       Lyon, 257 S.W.3d at 233–34 (clause was not so inconvenient to the lessee that enforcing it would produce an unjust
       result, even though lessee claimed it lacked the financial or logistical ability to pursue its claims in Pennsylvania); AIU,
       148 S.W.3d at 112–13 (rejecting argument that many if not most potential witnesses regarding coverage issues were
       in Texas and therefore trial in New York would be seriously inconvenient); First ATM, Inc. v. Onedoz, Inc., No. 03–
       08–00286–CV, 2009 WL 349164, at *3 (Tex.App.-Austin Feb. 13, 2009, no pet.) (mem. op.) (holding that unsupported
       pleadings regarding a party's financial condition and its expected costs of litigation in Texas did not show that litigating
       in Texas would be so inconvenient that party would be deprived of its day in court); Bailey v. Sorenson Labs., Inc., 217
       B.R. 523, 527 (Bankr.E.D.Tex.1997) (finding that mere fact that debtor had experienced financial difficulties resulting
       in bankruptcy was not sufficient to preclude enforcement of a forum-selection clause on the theory that it had become
       seriously inconvenient).
8      407 U.S. 1, 16, 92 S.Ct. 1907, 32 L.Ed.2d 513 (1972) (the Supreme Court also noted: “the serious inconvenience of the
       contractual forum to one or both of the parties might carry greater weight in determining the reasonableness of the forum
       clause,” id. at 17, 92 S.Ct. 1907). The Court later clarified in Carnival Cruise Lines, Inc. v. Shute that the inconvenience
       discussion in The Bremen was in the context of a hypothetical agreement between two Americans to resolve a local
       dispute in a remote alien forum, not an agreement to resolve the dispute in another of the United States. 499 U.S. 585,
       594, 111 S.Ct. 1522, 113 L.Ed.2d 622 (1991). See Lyon, 257 S.W.3d at 234.
9      See, e.g., AIU, 148 S.W.3d at 112–13; Deep Water Slender Wells, Ltd. v. Shell Int'l Exploration & Prod., Inc., 234 S.W.3d
       679, 692–93 (Tex.App.-Houston [14th Dist.] 2007, pet. denied); In re Talent Tree Crystal, No. 01–05–00686–CV, 2006
       WL 305015, at *4 (Tex.App.-Houston [1st Dist.] Feb. 9, 2006, no pet.) (mem. op.); Phoenix Network Techs. (Europe) Ltd.
       v. Neon Sys., Inc., 177 S.W.3d 605, 621 (Tex.App.-Houston [1st Dist.] 2005, no pet.).
10     Parties ought not bear an expectation of prognostication when it comes to their health, required to foretell whether future
       maladies might make a potential out-of-state trial too onerous. Infirmities are inevitable, but that doesn't make them
       foreseeable such that healthy parties who execute a forum-selection clause must consider whether health woes years or
       decades down the road might pose a travel problem. Cross-country travel may be undemanding for a healthy 60–year–
       old who signs a forum-selection clause but inconceivable for an ailing almost–80–year–old who contests one.
11     304 S.W.3d at 375 (citing AIU, 148 S.W.3d at 113 (quoting The Bremen, 407 U.S. at 18, 92 S.Ct. 1907)).
12     Int'l Profit Assocs., 274 S.W.3d at 680 (emphasis added). See also Lyon, 257 S.W.3d at 234 (noting no “proof of special
       and unusual circumstances” and “no evidence that ... conditions changed from the time the agreements were executed”).
13     See Lyon, 257 S.W.3d at 231 (“There is no adequate remedy by appeal when a trial court refuses to enforce a forum-
       selection clause, and such clauses can be enforced via mandamus.”).
14     Int'l Profit Assocs., 274 S.W.3d at 676.


End of Document                                                 © 2015 Thomson Reuters. No claim to original U.S. Government Works.




               © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                               8
 Giant Eagle's Motion to Strike                                                                                                 Page 47
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Tab J
R509
Tab K
                                                                                                                                 FILED
                                                                                                                     DALLAS COUNTY
                                                                                                                  10/6/2015 3:51:38 PM
                                                                                                                        FELICIA PITRE
                                                                                                                     DISTRICT CLERK



                                         CAUSE NO. DC-15-03853

DICKSON PERRY, derivatively on                            §                IN THE DISTRICT COURT
behalf of EXCENTUS CORPORATION,                           §
                                                          §
         Plaintiff,                                       §
                                                          §
vs.                                                       §
                                                          §
EXCENTUS CORPORATION,                                     §                DALLAS COUNTY, TEXAS
BRANDON LOGSDON, JIM MILLS,                               §
GIANT EAGLE, INC., DAVID                                  §
SHAPIRA, DANIEL SHAPIRA, AUTO-                            §
GAS SYSTEMS, INC., RANDY                                  §
NICHOLSON, and                                            §
ALLIANCE DATA SYSTEMS, INC.,                              §
                                                          §
         Defendants,                                      §               68TH JUDICIAL DISTRICT



      DEFENDANT GIANT EAGLE, INC.’S MOTION TO STAY ALL PROCEEDINGS,
       ASIDE FROM OUTSTANDING MOTIONS, PENDING RESOLUTION OF ITS
              FORTHCOMING PETITION FOR WRIT OF MANDAMUS

         Defendant Giant Eagle, Inc. (“Giant Eagle”) files this Motion to Stay All Proceedings,

Aside From Outstanding Motions, Pending Resolution of Its Forthcoming Petition for Writ of

Mandamus (“Motion”) with the Court of Appeals for the Fifth District of Texas.1 Giant Eagle

requests a hearing on this Motion as soon as practicable. In support of this Motion, Giant Eagle

states as follows:

         1.       Giant Eagle respectfully requests a stay of all proceedings (aside from

outstanding motions) so that it may have the opportunity to file a petition for writ of mandamus

in the Court of Appeals for the Fifth District of Texas seeking relief from this Court’s denial of


1
  The following motions are currently pending before this Court and are scheduled for hearing on November 2,
2015: Defendants David and Daniel Shapira’s Verified Special Appearance and Motion Objecting to Jurisdiction;
Defendants Motion to Abate and Plea to Jurisdiction; and Defendants Logsdon and Mills’s Motion to Dismiss.
Giant Eagle is not asking the Court to stay the hearing on these motions or otherwise delay determination thereof.
Rather, for the reasons explained herein, the present motion seeks to stay all proceedings after resolution of these
threshold issues, so as to preserve the status quo and protect Giant Eagle’s contractual rights.

DEFENDANT GIANT EAGLE, INC.’S MOTION TO STAY ALL PROCEEDINGS, ASIDE FROM OUTSTANDING
MOTIONS, PENDING RESOLUTION OF ITS FORTHCOMING PETITION FOR WRIT OF MANDAMUS                                PAGE 1
A0963864.1/266096.docx
                                                                                                                        R510
Giant Eagle’s Motion to Dismiss for Collateral Estoppel or, in the Alternative, Pursuant to the

Governing Forum Selection Clause (“Motion to Dismiss”).

         2.       On July 15, 2015, Giant Eagle filed its Motion to Dismiss, arguing that collateral

estoppel mandated application of the forum selection clause in the Excentus-Giant Eagle Stock

Purchase Agreements (“SP Agreements”) because of a prior decision by Judge Boyle of the U.S.

District Court for the Northern District of Texas. Excentus Corp. v. Giant Eagle, Inc., 3:11-cv-

03331, 2012 WL 2525594, at *8-11 (N.D. Tex. July 2, 2012). Giant Eagle’s position is that

venue for this action is only proper in Allegheny County, Pennsylvania. Giant Eagle also

argued, in the alternative, that even if collateral estoppel did not apply, the forum selection

clause in the SP Agreements nevertheless applied for the same reasons outlined in Judge

Boyle’s opinion; namely, that the dispute “arose out of” the SP Agreements because the court

would be required to determine the parties’ rights thereunder to resolve Perry’s claims.

         3.       At oral argument on August 24, 2015, this Court denied Giant Eagle’s motion to

dismiss with respect to the collateral estoppel argument.

         4.       By order dated and signed September 22, 2015, this Court denied Giant Eagle’s

motion to dismiss with respect to the forum selection clause. Giant Eagle did not receive notice

of this order until September 28, 2015 after Excentus’ counsel checked the Court’s docket.

         5.       Giant Eagle plans to file a petition for writ of mandamus in the Court of Appeals

for the Fifth District of Texas seeking review of, and relief from, this Court’s denial of Giant

Eagle’s Motion to Dismiss. A petition for writ of mandamus is the appropriate method for

seeking review of this Court’s order refusing to apply the forum selection clause in the SP

Agreements. See In re ADM Investor Servs., Inc., 304 S.W.3d 371, 374 (Tex. 2010) (citing In

re AIU Ins. Co., 148 S.W.3d 109, 114–15 (Tex. 2004)) (“We have consistently granted petitions



DEFENDANT GIANT EAGLE, INC.’S MOTION TO STAY ALL PROCEEDINGS, ASIDE FROM OUTSTANDING
MOTIONS, PENDING RESOLUTION OF ITS FORTHCOMING PETITION FOR WRIT OF MANDAMUS                  PAGE 2
A0963864.1/266096.docx


                                                                                                R511
for writ of mandamus to enforce forum-selection clauses because a trial court that improperly

refuses to enforce such a clause has clearly abused its discretion.”).

         6.       A stay of all proceedings in the District Court pending a ruling by the Court of

Appeals on Giant Eagle’s forthcoming petition for writ of mandamus is necessary to preserve

the status quo and protect Giant Eagle’s rights. See, e.g., Syrian-American Oil Corp. S.A. v.

Pecten Orient Co., No. 2007-67830, 2010 WL 7096628, at *1 (109th Jud. Dist.—Harris County,

May 13, 2010) (granting motion to stay all trial court proceedings pending all appeals by

petition for writ of mandamus of court’s orders denying motion to dismiss on venue grounds).

Granting this stay would not result in any prejudice to Perry.

         7.       The right Giant Eagle bargained for in the SP Agreements – i.e., litigation in the

agreed upon forum (Pennsylvania) – will be lost forever if Giant Eagle is forced to proceed with

discovery and further litigation in Texas while its petition for writ of mandamus is pending. See

In re Lisa Laser USA, Inc., 310 S.W.3d 880, 883 (Tex. 2010) (“an appellate remedy is

inadequate when a trial court improperly refuses to enforce a forum-selection clause because

allowing the trial to go forward will vitiate and render illusory the subject matter of an appeal—

i.e., trial in the proper forum.” (quotations and citations omitted)).

         8.       Further, in order to protect Giant Eagle’s rights, the court should stay the entire

proceeding, not just proceedings against Giant Eagle. If proceedings go forward without Giant

Eagle, and its petition is denied, Giant Eagle may miss the opportunity to protect its rights by

taking discovery, including by deposing Plaintiff Perry.

         9.       In addition, a stay is necessary to protect the rights of other Defendants,

particularly David and Daniel Shapira (together, the “Shapiras”). As noted in Giant Eagle’s

Motion to Dismiss, the forum selection clause also applies to the Shapiras. (See Motion to



DEFENDANT GIANT EAGLE, INC.’S MOTION TO STAY ALL PROCEEDINGS, ASIDE FROM OUTSTANDING
MOTIONS, PENDING RESOLUTION OF ITS FORTHCOMING PETITION FOR WRIT OF MANDAMUS                   PAGE 3
A0963864.1/266096.docx


                                                                                                 R512
Dismiss at 1, n.1). The Shapiras did not join Giant Eagle’s Motion to Dismiss so as not to waive

their Special Appearance and Motion Objecting to Jurisdiction (scheduled for hearing on

November 2, 2015). If the Shapiras’ Special Appearance is denied, however, they will move to

dismiss because collateral estoppel mandates that this court apply the forum selection clause to

them as well. Like Giant Eagle, the Shapiras would lose the benefit of the forum selection

clause forever if they were required to participate in discovery and further proceedings before

the applicability of the forum selection clause is fully resolved in the court of appeals.

         10.      For the reasons set forth above, Giant Eagle respectfully requests that all

proceedings in this matter, other than those currently scheduled to be heard on November 2,

2015, be stayed pending the final resolution of Defendants’ Petition for Writ of Mandamus.

                                               Respectfully Submitted,

                                           /s/ Orrin L. Harrison III
                                           Orrin L. Harrison III
                                             Bar No. 09130700
                                             oharrison@ghetrial.com
                                           GRUBER HURST ELROD JOHANSEN HAIL SHANK, LLP
                                           1445 Ross Avenue, Suite 2500
                                           Dallas, TX 75202
                                           Telephone: 214-855-6828
                                           Fax: 214-855-6808
                                                          -and-
                                           Bernard Marcus
                                             marcus@marcus-shapira.com
                                           Scott Livingston
                                             livingston@marcus-shapira.com
                                           Jonathan Marcus
                                             jmarcus@marcus-shapira.com
                                           MARCUS & SHAPIRA LLP
                                           301 Grant Street, 35th Floor
                                           One Oxford Centre
                                           Pittsburgh, Pennsylvania 15219-6401
                                           Telephone: 412-338-5200
                                           Fax: 412-391-8758
                                           Attorneys for Giant Eagle, Inc., David Shapira, and
                                           Daniel Shapira

DEFENDANT GIANT EAGLE, INC.’S MOTION TO STAY ALL PROCEEDINGS, ASIDE FROM OUTSTANDING
MOTIONS, PENDING RESOLUTION OF ITS FORTHCOMING PETITION FOR WRIT OF MANDAMUS                 PAGE 4
A0963864.1/266096.docx


                                                                                               R513
                              CERTIFICATE OF CONFERENCE

       Counsel for movant and counsel for respondent have personally conducted a conference
at which there was a substantive discussion of every item presented to the Court in this motion
and despite best efforts the counsel have not been able to resolve those matters presented.

         Certified to the Day of October 6, 2015.


                                              /s/ Orrin L. Harrison III
                                              Orrin L. Harrison III

                                 CERTIFICATE OF SERVICE

       The undersigned certifies that a copy of the foregoing instrument was served upon the
attorneys of record in the above cause via electronic filing and E-Mail, in accordance with Rule
21a, Texas Rules of Civil Procedure, on October 6, 2015.


                                              /s/ Orrin L. Harrison III
                                              Orrin L. Harrison III




DEFENDANT GIANT EAGLE, INC.’S MOTION TO STAY ALL PROCEEDINGS, ASIDE FROM OUTSTANDING
MOTIONS, PENDING RESOLUTION OF ITS FORTHCOMING PETITION FOR WRIT OF MANDAMUS             PAGE 5
A0963864.1/266096.docx


                                                                                            R514
                                 CAUSE NO. DC-15-03853

DICKSON PERRY, derivatively on                  §            IN THE DISTRICT COURT
behalf of EXCENTUS                              §
CORPORATION,                                    §
                                                §
         Plaintiffs,                            §
                                                §
vs.                                             §
                                                §            DALLAS COUNTY, TEXAS
BRANDON LOGSDON, JIM MILLS,                     §
GIANT EAGLE, INC., DAVID                        §
SHAPIRA, DANIEL SHAPIRA,                        §
AUTO-GAS SYSTEMS, INC.,                         §
RANDY NICHOLSON, and                            §
ALLIANCE DATA SYSTEMS, INC.,                    §
                                                §           68TH JUDICIAL DISTRICT
         Defendants,                            §



                                           ORDER




         After considering Defendant Giant Eagle’s Motion to Stay All Proceedings, Aside from

Outstanding Motions, Pending Resolution of Its Forthcoming Petition for Writ of Mandamus, the

Court:

         GRANTS Giant Eagle’s Motion to Stay.

         SIGNED on this _____ day of ______________, 2015.



                                                    ____________________________
                                                    PRESIDING JUDGE




266639.docx                                                                         Page Solo

                                                                                        R515
Tab L
                                                                                                               FILED
                                                                                                   DALLAS COUNTY
                                                                                               10/14/2015 7:39:58 PM
                                                                                                      FELICIA PITRE
                                                                                                   DISTRICT CLERK



                                  CAUSE NO. DC-15-03853

DICKSON PERRY, derivatively on behalf  §             IN THE DISTRICT COURT
of EXCENTUS CORPORATION,               §
                                       §
      Plaintiff,                       §
                                       §
v.                                     §          OF DALLAS COUNTY, TEXAS
                                       §
BRANDON LOGSDON, JIM MILLS,            §
GIANT EAGLE, INC., DAVID SHAPIRA, §
DANIEL SHAPIRA, AUTO-GAS               §
SYSTEMS, INC., RANDY NICHOLSON, §
AND ALLIANCE DATA SYSTEMS, INC., §
and EXCENTUS CORPORATION.              §
                                       §
      Defendants.                      §             68TH JUDICIAL DISTRICT
______________________________________________________________________________

         PLAINTIFF’S RESPONSE TO DEFENDANT GIANT EAGLE, INC.’S
                     MOTION TO STAY ALL PROCEEDINGS
______________________________________________________________________________

TO THE HONORABLE JUDGE:

       Plaintiff Dickson Perry (“Mr. Perry” or “Perry”) responds to Defendant Giant Eagle, Inc.’s

(“Giant Eagle”), Motion to Stay the All Proceedings Pending Resolution of Its Forthcoming

Petition For Writ of Mandamus (the “Motion”) and respectfully shows the Court as follows:

                                  I.      INTRODUCTION

       The Court should deny Giant Eagle’s Motion to Stay All Proceedings for four reasons.

       First, Mr. Perry would be prejudiced if all proceedings were stayed for a single defendant.

This case involves multiple parties and multiple claims, most of whom would not be affected by

the mandamus relief sought by Giant Eagle. This case will require significant discovery, and Mr.

Perry must commence that discovery before memories begin to fade and important witnesses

resign, move, or otherwise become unavailable. Halting the progress of this case for a single

defendant when there are multiple claims and other parties involved would unnecessarily delay

______________________________________________________________________________
PLAINTIFF’S RESPONSE TO GIANT EAGLE’S MOTION TO STAY                                      Page 1
                                                                                                     R516
Mr. Perry’s right to a speedy trial. Giant Eagle fails to explain why all of the remaining claims

against the other defendants should be stayed. Tellingly, this Court recently entered an agreed

Scheduling Order in this case establishing a trial date of November 29, 2016, as well as numerous

pretrial deadlines. Giant Eagle agreed to those dates and yet seeks to circumvent that Scheduling

Order despite its prior agreement to them. Giant Eagle’s motion should be denied.

       Second, Giant Eagle has not yet filed a petition for writ of mandamus and, therefore, its

Motion is premature and improper.

       Third, mandamus relief is extraordinary and will lie only when there has been a clear

abuse of discretion. The undisputed facts here show that there was no abuse of discretion by this

Court. Courts are reluctant to grant a stay pending a mandamus decision when it is unlikely that

the movant will succeed on the merits — as is the case here.

       Fourth, it is unnecessary and unwarranted to stay all proceedings or even the proceedings

as they relate to Giant Eagle. Giant Eagle cited no statute or precedent that requires a stay of all

the proceedings based upon the particular circumstances of this case. Further, mandamus relief is

similar in nature to an appeal from an interlocutory order which, absent specific circumstances

delineated by the Texas legislature, does not necessitate the staying of a case and certainly not the

staying of all proceedings. And even when an interlocutory appeal demands an automatic stay,

such a stay relates to the commencement of trial and typically does not apply to any other

proceedings for which the trial court retains jurisdiction.       The same reasoning should be

applicable here. Accordingly, for all of the above reasons, the request for a stay should be denied.




______________________________________________________________________________
PLAINTIFF’S RESPONSE TO GIANT EAGLE’S MOTION TO STAY                                         Page 2


                                                                                                 R517
                             II.     RELEVANT BACKGROUND

       Previously, Defendant Giant Eagle moved to dismiss Mr. Perry’s complaint on the basis of

collateral estoppel and, alternatively, pursuant to a forum-selection clause in the Stock Purchase

Agreements in which, approximately 10 years ago, Giant Eagle purchased certain shares of stock

in Excentus (the “SP Agreements”). As to collateral estoppel, this Court denied Giant Eagle’s

Motion at oral argument for numerous reasons, including that Mr. Perry’s claims in this lawsuit

have never actually been litigated (nor could they have been) because they arise out of the actions

of Excentus shareholders, directors, and officers during the summer of 2014 — over two years

after the issuance of the opinion Giant Eagle contends fully adjudicated the forum-selection clause

issue. As to the forum-selection clause, this Court sought further briefing regarding the applicable

language of the SP Agreements — specifically, the “arising out of” language. After receiving that

briefing, this Court denied Giant Eagle’s Motion to Dismiss. In doing so, the Court recognized

that “tangential” connections between the SP Agreements and the claims in this case or

agreements that “merely created the conditions that led to” the parties dealing with each other are

insufficient to bring the subject dispute within the forum-selection provision. The Court also

recognized that the designation of Dallas, Texas as the forum for disputes “arising out of or

related to” the Excentus/Giant Eagle settlement agreement directly contradicted Giant Eagle’s

contention that it negotiated and expected Pittsburgh to be the forum for all disputes involving the

parties and that, further, the settlement agreement’s broad forum-selection provision stands in

sharp contrast to the narrow provision Giant Eagle negotiated and agreed to in the SP

Agreements.

       In short, after consideration, and in a proper exercise of its discretion, this Court rejected

both of Giant Eagle’s arguments. Giant Eagle now seeks a second bite of the apple and, in doing


______________________________________________________________________________
PLAINTIFF’S RESPONSE TO GIANT EAGLE’S MOTION TO STAY                                        Page 3


                                                                                                 R518
so, necessarily seeks to delay the adjudication of this case having previously agreed to the

pre-trial scheduling order governing this case. This Court should deny the Motion.



                                               III.     ARGUMENT

A.       Giant Eagle Has Not and Cannot Demonstrate Compelling Circumstances for a Stay.

         A motion to stay will necessarily delay this case.                      The Texas Supreme Court has

recognized that a stay “increases delay and expense and should not be done absent compelling

circumstances.” Coal. of Cities for Affordable Util. Rates v. Third Court of Appeals, 787 S.W.2d

946, 947 (Tex. 1990) (per curiam) (emphasis added). A motion to stay can also become a

strategic weapon used by an opponent to unnecessarily prevent discovery, increase expense, and

all around delay litigation.

         As the Court is aware, this case involves several claims against several defendants.

Staying all proceedings gives Giant Eagle the power to delay not only claims against it but other

claims against at least six other Defendants that are unrelated and unaffected by any mandamus

request — all at Mr. Perry’s expense. Mr. Perry is entitled to commence discovery before

memories begin to fade and important witnesses resign, move, or otherwise become unavailable.1

Staying the case would cause Mr. Perry to be unduly prejudiced in accessing the necessary

witnesses and documents that are crucial to the support of all his claims, not just those against

Giant Eagle. What is more, even if the claims against Giant Eagle were to be finally tried in

Pennsylvania (an event Mr. Perry and the undersigned believes is unlikely), the discovery

developed in Texas would necessarily be used in that proceeding. This Court recently entered a

Scheduling Order in this case setting a trial date of November 29, 2016, as well as numerous


         1
           It is worth noting that, unfortunately, there are several witnesses whose health is a serious issue, including
two of the named Defendants, and further delay could result in their testimony not being taken in this case.
______________________________________________________________________________
PLAINTIFF’S RESPONSE TO GIANT EAGLE’S MOTION TO STAY                                                             Page 4


                                                                                                                       R519
pretrial deadlines. Exhibit A, Scheduling Order Entered By Court On September 21, 2015. By

requesting a stay of all proceedings, Giant Eagle is circumventing this agreed Scheduling Order.

Accordingly, the Court should deny the Motion.

B.     Giant Eagle’s Motion Is Premature Because It Has Not Filed A Petition For Writ of
       Mandamus And, In Any Event, The Motion Should Be Addressed By The Court of
       Appeals.

       Giant Eagle has not yet filed a petition for writ of mandamus. Thus, its Motion is

premature and improper, as it asks this Court to stay all proceedings because it contends it will, at

some unspecified time, file a petition for writ of mandamus. It cannot seek a stay before it has

filed a petition for writ of mandamus. See In re Khan, No. 13-12-00404-CV, 2012 WL 2360885,

at *1 (Tex. App. — Corpus Christi June 21, 2012, no pet.) (per curiam) (mem. op.) (denying the

motion to stay and mandamus petition because relator failed to meet the rigorous requirements

specified in Texas Rule of Appellate Procedure 52.3 and 52.7); see also Tex. R. App. P. 52.

Notably, in its Motion, Giant Eagle has not even alleged this Court abused its discretion or that it

has met the requirements for the relief sought on appeal.

       In any event, in the rare instances where a stay is instituted pending mandamus, it is

generally the Court of Appeals — not the trial court — that effectuates the stay. D’Brien v.

Alderman, No. 2009-20328, 2011 WL 2790533 (151st Jud. Dist.—Harris County, Jan. 11, 2011)

(acknowledging that when a direct appeal is not allowed through the appellate procedures or

statutes, relief “may be sought by mandamus and a motion to stay in the court of appeals”); In re

Julian, No. 13-08-00363-CV, 2008 WL 2503280, at *1 (Tex. App.—Corpus Christi June 5, 2008,

no pet.) (per curiam) (granting a motion to stay only after having examined and fully considered

the motion); Archer Daniels Midland Co. v. Garcia, No. 01-96-01466-CV, 1996 WL 711266, at

*1 (Tex. App.—Houston [1st Dist.] Dec. 5, 1996, no writ) (making the initial determination as to


______________________________________________________________________________
PLAINTIFF’S RESPONSE TO GIANT EAGLE’S MOTION TO STAY                                         Page 5


                                                                                                 R520
whether to allow leave for relator to file a petition for writ of mandamus and whether to grant the

emergency motion to stay). Deferring to the Court of Appeals here is prudent because it is better

positioned to initially assess the merits of the mandamus petition and it avoids unnecessary delays

in the trial court proceedings, particularly in those circumstances when the mandamus relief will

be unlikely or has not been properly sought. See In re Khan, 2012 WL 2360885, at *1 (denying

the motion to stay and mandamus petition because relator failed to meet the rigorous requirements

specified in Texas Rule of Appellate Procedure 52.3 and 52.7).

       Accordingly, even if this Court were inclined to grant a stay, it should nevertheless defer

to the Court of Appeals as to whether a stay is appropriate.

C.     Giant Eagle’s Motion to Stay Should be Denied Because the Mandamus Relief
       Sought is Extraordinary and Giant Eagle Has Not Shown That It Would Likely
       Obtain Such Relief.

       Crucial to a court’s discretion in ruling on a motion to stay is whether the movant has met

the requirements for a writ of mandamus. Sanchez v. Huntsville Indep. Sch. Dist., 844 S.W.2d

286, 291 (Tex. App.—Houston [1st Dist.] 1992, no writ) (upholding the trial court’s denial of the

motion to stay because the movant did not meet the requirements for obtaining injunctive relief);

Erwin v. Valley Hosp. Medical Center, No. A636641, 2011 WL 7737836 (D. Nev. Aug. 29, 2011)

(holding that the defendant was not entitled to a stay pending writ because it had not shown that it

will likely succeed on the merits in the writ petition). It is well-settled under Texas law that

“mandamus is an extraordinary remedy, available only in limited circumstances.” Walker v.

Packer, 827 S.W.2d 833, 839-40 (Tex. 1992) (emphasis added); see also Tex. R. App. P. 52.1.

Mandamus will only issue when necessary to correct a “clear abuse of discretion.” Walker, 827

S.W.2d at 839 (emphasis added). A clear abuse of discretion occurs when the trial court “reaches

a decision so arbitrary and unreasonable as to amount to a clear and prejudicial error of law.” Id.


______________________________________________________________________________
PLAINTIFF’S RESPONSE TO GIANT EAGLE’S MOTION TO STAY                                        Page 6


                                                                                                R521
A reviewing court will not issue a mandamus “to control the action of a lower court in a matter

involving discretion.” Cessna Aircraft Co. v. Kirk, 702 S.W.2d 321, 323 (Tex. App.—Eastland

1986, no writ) (internal citations omitted), nor will the court substitute its judgment for that of the

trial court with respect to factual issues, Packer, 827 S.W.2d at 839. “A mere error in judgment is

not an abuse of discretion.” In re Clark, 977 S.W.2d 152, 155 (Tex. App.—Houston [14th Dist.]

1998, no pet.) (internal citation omitted).

       In terms of forum-selection clauses, a trial court abuses its discretion when the clause is

found to be unambiguous and the matter before the court falls within its scope. However, when a

contract is ambiguous, it is reasonably susceptible to two or more meanings and creates a fact

issue for regarding the parties’ intent. Columbia Gas Transmission Corp. v. New Ulm Gas, Ltd.,

940 S.W.2d 587, 589 (Tex. 1996). “A trial court does not abuse its discretion if it bases its

decision on conflicting evidence and some evidence supports its decision.” In re Barber, 982

SW 2d 364, 366 (Tex. 1998) (emphasis added). Therefore, to support its request, Giant Eagle

must be able to show that there was only one permissible view of the evidence and the trial court

“could reasonably have reached only one decision.” Packer, 827 S.W.2d at 839. Importantly,

Texas courts construe “arise out of” (which was the language at issue in the SP Agreements) or

similar language narrowly and to exclude the particular claims at issue in this case. See, e.g.,

Busse v. Pac. Cattle Feeding Fund No. 1, Ltd., 896 S.W.2d 807, 812 (Tex. App.—Texarkana

1995, writ denied) (in forum selection case, construing “arising hereto” to exclude tort claims

where “[t]he rights, obligations, and cause of action do not arise from the contracts but from the

Deceptive Trade Practices Act, the Texas Securities Act, and the common law”); Major Help Ctr.,

Inc. v. Ivy, Crews & Elliott, P.C., 03-99-00285-CV, 2000 WL 298282, at *2 (Tex. App.—Austin

Mar. 23, 2000, no pet.) (in forum-selection case, construing “[a]ny action brought by either party


______________________________________________________________________________
PLAINTIFF’S RESPONSE TO GIANT EAGLE’S MOTION TO STAY                                          Page 7


                                                                                                   R522
under this agreement” to exclude tort claims that “do not rely on the terms of the Agreement as

the[ir] basis” and plaintiffs “do not attempt to enforce duties or obligations arising under the

Agreement”); Osornia v. AmeriMex Motor & Controls, Inc., 367 S.W.3d 707, 712 (Tex. App.—

Houston [14th Dist.] 2012, no pet.) (in arbitration case, construing “any and all claims arising out

of this Agreement” narrowly due to absence of “relating to” language); Associated Air Freight,

Inc. v. Meek, 01-00-00843-CV, 2001 WL 225516, at *2 (Tex. App.—Houston [1st Dist.] Mar. 8,

2001, no pet.) (in arbitration case, construing “a dispute hereunder” to exclude claims where

“allegations in this lawsuit touch only tangentially on the” agreements at issue).

       Giant Eagle has failed to show it meets the requirements for mandamus relief and thus

should not be entitled to stay the proceedings of this case. See, e.g., In re Ruby Tequila's

Amarillo W., LLC, 07-11-00494-CV, 2012 WL 537812, *5 (Tex. App.—Amarillo Feb. 17, 2012,

no pet.) (finding underlying suit was not within the scope of forum-selection clause in certain

agreements and denying the petition for writ of mandamus). Specifically, the SP Agreements’

forum-selection clause brings within its scope only disputes “arising out of” the SP Agreements,

which Texas courts have interpreted to mean disputes that look to the subject agreement as the

source of the obligations allegedly breached.         Indeed, the settlement agreement’s broad

forum-selection provision Giant Eagle negotiated and agreed to — encompassing all claims

“related to” the settlement agreement — stands in sharp contrast to the narrow provision Giant

Eagle negotiated and agreed to in the SP Agreements. Mr. Perry’s claims arise out of Defendants’

breaches of obligations imposed by Texas common and statutory law, not by the SP Agreements,

and his claims make no reference to any of the rights or obligations in the SP

Agreements. Further, at the very least, conflicting evidence exists given that the settlement

agreement entered into by Excentus and Giant Eagle designates Dallas, Texas as the forum for


______________________________________________________________________________
PLAINTIFF’S RESPONSE TO GIANT EAGLE’S MOTION TO STAY                                        Page 8


                                                                                                R523
disputes related to that settlement agreement, which directly contradicts Giant Eagle’s contention

that it negotiated and expected Pittsburgh to be the forum for all disputes involving the parties.

See In re Sterling Chemicals, Inc., 261 S.W.3d 805, 811 (Tex. App.—Houston [14th Dist.] 2008,

no pet.) (finding that inconsistency among agreements created an ambiguity and, therefore, trial

court did not abuse its discretion by denying motions to dismiss based on a forum-selection

clause); In re Yahoo! Inc., 313 F. App’x. 722, 723 (5th Cir. 2009) (holding that mandamus relief

was not warranted and the district court did not abuse its discretion in determining that the forum

selection clause was ambiguous and the claims were not subject to the clause); Louisiana Ice

Cream Distributors, Inc. v. Carvel Corp., 821 F.2d 1031, 1033 (5th Cir. 1987) (holding that

mandamus review regarding the forum selection clause would have been inappropriate because

the clause was ambiguous and the trial court’s determination involved questions of fact).

       Therefore, because Giant Eagle is unable to meet the heavy burden required to prove it is

entitled to mandamus relief and, at the very least, there is conflicting evidence making the denial

of the motion to dismiss a decision well within the discretion of this Court, this Court should deny

Giant Eagle’s Motion.

D.     Staying the Entire Case is Unwarranted, Particularly When All of Mr. Perry’s
       Claims Do Not Implicate the Stock Purchase Agreement’s Forum-Selection Clause.

       It is unnecessary to stay the entire case or even the proceedings related to Giant Eagle.

Giant Eagle has cited no statute or precedent that requires a stay of all the proceedings based on

the particular circumstances of this case. Not every mandamus request requires the trial court to

stay its proceedings. See, e.g., Whittington v. Bayer Materialscience LLC, No. 22949, 2007 WL

5112566 (253rd Jud. Dist. — Chambers County, Aug. 27, 2007) (denying the motion to stay




______________________________________________________________________________
PLAINTIFF’S RESPONSE TO GIANT EAGLE’S MOTION TO STAY                                        Page 9


                                                                                                R524
pending writ of mandamus). 2

        Giant Eagle’s single citation to Syrian-American Oil Corp. S.A. v. Pecten Orient Co., No.

2007-67830, 2010 WL 7096628, at *1 (109th Jud. Dist.—Harris County, May 13, 2010), in

support of its Motion provides no reasoning or guidance for the Court’s consideration and is, at

best, distinguishable.      For instance, while devoid of any analysis whatsoever, there is sno

indication in that case that the trial court was faced with a situation involving multiple claims

against multiple defendants, the potential for testimony to become unavailable, the lack of a

petition for writ of mandamus, and the absence of any indication of even the potential for an

abuse of discretion—factors that would undoubtedly impact the motion to stay analysis here and

weigh in favor of its denial. Again, none of the pending claims against Excentus, Brandon

Logsdon, Jim Mills, Auto-Gas Systems, Inc., Randy Nicholson, and Alliance Data Systems, Inc.

will be affected by Giant Eagle’s proposed mandamus request as those claims are not subject to

the SP Agreements. It is unnecessary to prolong the entire case when only three of the nine

parties may potentially be affected. Sheinfeld, Maley & Kay, P.C. v. Bellush, 61 S.W.3d 437, 439

(Tex. App.—San Antonio 2001, no pet.) (holding that “[t]he trial court retains jurisdiction over

the case and may go forward with all other proceedings except the commencement of trial”).

        Mandamus relief is similar in nature to an appeal from an interlocutory order which,

absent specific circumstances delineated by the Texas legislature, does not necessitate the staying

of a case and certainly not the staying of all proceedings. And even when an interlocutory appeal

demands an automatic stay, such stay generally only relates to the commencement of trial and

typically does hinder the trial court’s jurisdiction on pretrial proceedings. See Tex. Civ. Prac. &

Rem. Code Ann. § 51.014(b). The same reasoning should apply here.

        2
            Indeed, if every mandamus request required a stay of all proceedings it would encourage defendants to
request mandamus at any opportunity — even if they believed such requests to be wholly without merit — in an
effort to unnecessarily prolong and stay cases.
______________________________________________________________________________
PLAINTIFF’S RESPONSE TO GIANT EAGLE’S MOTION TO STAY                                                  Page 10


                                                                                                             R525
       Therefore, this Court should deny Giant Eagle’s Motion. Alternatively, even if this Court

determines that the circumstances warrant a stay, this Court should only stay the case as to the

commencement of trial with respect to Giant Eagle and should continue with all other

proceedings against the defendants.




                            IV.       CONCLUSION AND PRAYER

       For the foregoing reasons, Plaintiff respectfully requests that the Court deny Giant Eagle’s

Motion to Stay All Proceedings. Alternatively, if the Court determines a stay is warranted, the

stay should only be to the commencement of trial against Giant Eagle and the Court should

continue all other proceedings against the defendants.



Date: October 14, 2015                       Respectfully submitted,

                                             /s/Michael P. Lynn
                                             Michael P. Lynn, P.C. (mlynn@lynnllp.com)
                                             State Bar No. 12738500
                                             Andrés Correa (acorrea@lynnllp.com)
                                             State Bar No. 24076330
                                             Andrew S. Hansbrough (ahansbrough@lynnllp.com)
                                             State Bar No. 24094700
                                             LYNN TILLOTSON PINKER & COX, LLP
                                             2100 Ross Avenue, Suite 2700
                                             Dallas, Texas 75201
                                             214-981-3800 Telephone
                                             214-981-3839 Facsimile

                                             ATTORNEYS FOR PLAINTIFF
                                             DICKSON PERRY




______________________________________________________________________________
PLAINTIFF’S RESPONSE TO GIANT EAGLE’S MOTION TO STAY                                      Page 11


                                                                                               R526
                               CERTIFICATE OF SERVICE

      The undersigned hereby certifies that a true and correct copy of the above and foregoing
document has been served as shown below on counsel of record on October 14, 2015:

Via Email                                         Via Email
Orrin L. Harrison III                             Lisa S. Gallerano
(oharrison@ghjhlaw.com)                           (lgallerano@akingump.com)
GRUBER HURST ELROD JOHANSEN HAIL                  Patrick O’Brien (pobrien@akingump.com)
SHANK, LLP                                        AKIN GUMP
1445 Ross Avenue, Suite 2500                      1700 Pacific Avenue, Suite 4100
Dallas, TX 75202                                  Dallas, TX 75201-4624
Attorneys for Defendants                          Attorneys for Defendant
Giant Eagle, Inc., David Shapira, and             Alliance Data Systems, Inc.
Daniel Shapira
                                                  Via Email
Via Email                                         Ken Carroll (kcarroll@ccsb.com)
Bernard Marcus (marcus@marcus-                    Byran Erman (berman@ccsb.com)
shapira.com)                                      Sara Romine (sromine@ccsb.com)
Scott Livingston (livingston@marcus-              CARRINGTON, COLEMAN, SLOMAN &
shapira.com)                                      BLUMENTHAL, L.L.P.
Jonathan Marcus (jmarcus@marcus-                  901 Main Street, Suite 5500
shapira.com)                                      Dallas, TX 75202-3767
MARCUS & SHAPIRA LLP                              Attorneys for Defendants
301 Grant Street, 35th Floor                      Brandon Logsdon and Jim Mills
One Oxford Centre
Pittsburgh, PA 15219-6401
Attorneys for Defendants
Giant Eagle, Inc., David Shapira, and
Daniel Shapira


Via Email
Robert B. Wagstaff (rwagstaff@mcmahonlawtx.com)
MCMAHON SUROVIK SUTTLE
P.O. Box 3679
Abilene, TX 79604
Attorney for Defendants
Randy Nicholson and Auto-Glass Systems, Inc.


                                           /s/ Andres Correa
                                           Andres Correa


4852-7445-3545, v. 1



______________________________________________________________________________
PLAINTIFF’S RESPONSE TO GIANT EAGLE’S MOTION TO STAY                                 Page 12


                                                                                          R527
EXHIBIT A




            R528
R529
R530
R531
R532
R533
Tab M
                                 CAUSE NO. DC-15-03853

DICKSON PERRY, derivatively on behalf
                                  §                            IN THE DISTRICT COURT
ofEXCENTUS CORPORATION,           §
                                  §
      Plaintiff,                  §
                                  §
v.                                §                        OF DALLAS COUNTY, TEXAS
                                  §
BRANDON LOGSDON, llM MILLS,       §
GIANT EAGLE, INC., DAVID SHAPIRA, §
DANIEL SHAPIRA, AUTO-GAS          §
SYSTEMS, INC., RANDY NICHOLSON, §
AND ALLIANCE DATA SYSTEMS, INC., §
and EXCENTUS CORPORATION.         §
                                  §
      Defendants.                 §                            68TH JUDICIAL DISTRICT


                                          ORDER


       Before the Court is Defendant Giant Eagle, Inc.'s Motion to Stay All Proceedings, Aside

from Outstanding Motions, Pending Resolution of Its Forthcoming Petition for Writ of

Mandamus ("the Motion"). On October 19, 2015 the parties appeared through their counsel.

Having considered the parties' briefing, the arguments of counsel, and all of the evidence

properly before it, the Court hereby DENIES the Motion.

       IT IS THEREFORE ORDERED, ADJUDGED AND DECREED that Defendant's

Motion is DENIED.                                1·

       SIGNEDthis_li_day of _ _J_c-=··(j):..._f__.Y/'-------'2015.




                                    HON. MARTIN HOFFMAN, PRESIDING JUDGE




ORDER                                                                                   Page 1



                                                                                             R534
Tab N
                                                                                                                     FILED
                                                                                                         DALLAS COUNTY
                                                                                                     9/18/2015 10:56:34 AM
                                                                                                            FELICIA PITRE
                                                                                                          DISTRICT CLERK



                                     CAUSE NO. DC-15-03853

DICKSON PERRY, derivatively on behalf
                                  §                                   IN THE DISTRICT COURT
of EXCENTUS CORPORATION,          §
                                  §
      Plaintiff,                  §
                                  §
v.                                §                               OF DALLAS COUNTY, TEXAS
                                  §
BRANDON LOGSDON, JIM MILLS,       §
GIANT EAGLE, INC., DAVID SHAPIRA, §
DANIEL SHAPIRA, AUTO-GAS          §
SYSTEMS, INC., RANDY NICHOLSON, §
AND ALLIANCE DATA SYSTEMS, INC., §
and EXCENTUS CORPORATION.         §
                                  §
      Defendants.                 §                                   68TH JUDICIAL DISTRICT


    RESPONSE TO PLAINTIFF’S [PROPOSED] LEVEL THREE SCHEDULING ORDER


         Defendants Giant Eagle, Inc. (“Giant Eagle”), David Shapira, and Daniel Shapira

(collectively, “Giant Eagle and the Shapiras”), through undersigned counsel, respectfully submit

this Response to Plaintiff’s [Proposed] Level Three Scheduling Order (the “Proposed Order”) as

follows:1

         Giant Eagle and the Shapiras have no objection to many aspects of Plaintiff’s Proposed

Order, except (1) the schedule should commence only at the appropriate time, after a series of

preliminary matters have been decided; and (2) given the several preliminary matters either

pending or not yet scheduled for argument, the large number of Defendants, and the nature of the

claims, the trial in this action should be scheduled for no sooner than April 2017 to allow

sufficient time for discovery and summary judgment briefing.


1
 Giant Eagle and the Shapiras submit this Response subject to, reserving, and without prejudice to Giant
Eagle’s Motion to Dismiss for Collateral Estoppel or, in the Alternative, Pursuant to the Governing
Forum Selection Clause and Defendants David Shapira’s and Daniel Shapira’s Verified Special
Appearance and Motion Objecting to Jurisdiction.
A0954766.3
RESPONSE TO PLAINTIFF’S [PROPOSED] LEVEL THREE SCHEDULING ORDER                                  Page 1
4833-3615-0537
                                                                                                            R535
         Defendants David and Daniel Shapira’s Special Appearance (the “Shapira Special

Appearance”) hearing should not proceed until the Court rules on Giant Eagle’s Motion to

Dismiss for Collateral Estoppel or, in the Alternative, Pursuant to the Governing Forum

Selection Clause, as that ruling may eliminate the need for the Shapira Special Appearance. A

hearing on Defendants’ Motion to Abate is similarly premature, as it is not yet clear which

Defendants will be in the case. A short delay to address remaining preliminary matters will not

prejudice the Plaintiff Dickson Perry (“Mr. Perry”). Mr. Perry has been engaged since August in

substantial discovery in his employment arbitration proceeding against Excentus Corporation,

covering issues that largely overlap with the issues in this action. The arbitration hearing is

currently scheduled for November 2015.

         Defendants Giant Eagle and the Shapiras respectfully request that the Court refrain from

entering a scheduling order while the aforementioned preliminary matters are pending.

Alternatively, Giant Eagle and the Shapiras request that the Court set only the trial date for no

sooner than April 2017 pending resolution of these preliminary matters.




A0954766.3
RESPONSE TO PLAINTIFF’S [PROPOSED] LEVEL THREE SCHEDULING ORDER                            Page 2
4833-3615-0537


                                                                                             R536
Dated: September 18, 2015                Respectfully submitted,


                                         /s/ Orrin L. Harrison III
                                         Orrin L. Harrison III
                                           Texas Bar No. 09130700
                                           oharrison@ghetrial.com
                                         Hayley Ellison
                                           Texas Bar No. 24074175
                                           hellison@ghetrial.com
                                         GRUBER HURST ELROD
                                           JOHANSEN HAIL SHANK, LLP
                                         1445 Ross Avenue, Suite 2500
                                         Dallas, TX 75202
                                         Telephone: 214-855-6828
                                         Fax: 214-855-6808

                                                       -and-

                                         Bernard Marcus
                                           marcus@marcus-shapira.com
                                         Scott Livingston
                                           livingston@marcus-shapira.com
                                         Jonathan Marcus
                                           jmarcus@marcus-shapira.com
                                         MARCUS & SHAPIRA LLP
                                         301 Grant Street, 35th Floor
                                         One Oxford Centre
                                         Pittsburgh, Pennsylvania 15219-6401
                                         Telephone: 412-338-5200
                                         Fax: 412-391-8758

                                         Attorneys for Giant Eagle, Inc., David
                                         Shapira, and Daniel Shapira




A0954766.3
RESPONSE TO PLAINTIFF’S [PROPOSED] LEVEL THREE SCHEDULING ORDER                Page 3
4833-3615-0537


                                                                                R537
                                 CERTIFICATE OF SERVICE

         The undersigned certifies that a copy of the foregoing instrument was served upon the

attorneys of record in the above in accordance with the Texas Rules of Civil Procedure, on this

the 18th of September, 2015.

                                                      /s/ Hayley Ellison
                                                     Hayley Ellison




                              CERTIFICATE OF CONFERENCE

         I, the undersigned attorney, hereby certify to the Court that counsel for Giant Eagle and

the Shapiras has conferred with counsel for all Defendants regarding the issues presented by this

Response, and counsel for all Defendants have indicated they agree to the relief requested in this

Response.

                                                      /s/ Hayley Ellison
                                                     Hayley Ellison




A0954766.3
RESPONSE TO PLAINTIFF’S [PROPOSED] LEVEL THREE SCHEDULING ORDER                             Page 4
4833-3615-0537


                                                                                              R538
