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Supreme Court Throws Out Case of 80-Year Old Woman

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Last month, the Texas Supreme Court threw out a case brought by an 80-year old woman in poor health, and told her to sue in Illinois. The case arose from the losses the woman sustained in her investment account. She sued her commodities broker and its agent. The Texas trial court overruled the broker's motion to dismiss based upon a forum selection clause permitting it to be sued in Illinois. The Supreme Court granted mandamus, and ordered the trial court to dismiss the case, because the plaintiff "did not overcome the presumption against the [broker's] waiving its right to enforce the forum-selection clause, or satisfy her burden to demonstrate that enforcing the clause would be unreasonable and unjust."

The opinion was issued in the case of In re ADM Investor Services, Inc., ___ S.W.3d ___ (Tex. 2010)(2/19/10). The court focused upon the forms signed when the brokerage account was opened, years before, which gave the broker the right to be sued in Illinois. "We have consistently granted petitions 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."

The woman's lawyer argued that the defendant had waived its right by failing to obtain a hearing on the matter for three months. Disagreeing, the court ruled that there was no waiver of the forum selection clause. "A party waives a forum-selection clause by substantially invoking the judicial process to the other party's detriment or prejudice. There is a strong presumption against such waiver." Merely "participating in litigation does not categorically mean the party has invoked the judicial process so as to waive enforcement. Waiver can be implied from a party's unequivocal conduct, but not by inaction." Moreover, here the local agent's conduct in filing a separate suit in Texas did not constitute waiver because that was not within the scope of its grant of authority from the broker.

"A trial court abuses its discretion in refusing to enforce a forum-selection clause unless the party opposing enforcement of the clause can clearly show that (1) enforcement would be unreasonable or unjust, (2) the clause is invalid for reasons of fraud or overreaching, (3) enforcement would contravene a strong public policy of the forum where the suit was brought, or (4) the selected forum would be seriously inconvenient for trial. The burden of proof is heavy for the party challenging enforcement. When inconvenience in litigating in the chosen forum is foreseeable at the time of contracting, the challenger must 'show that trial in the contractual forum will be so gravely difficult and inconvenient that he will for all practical purposes be deprived of his day in court.'"

Here, the court said that the woman failed to carry her "heavy burden." She did not prove that she "could not proceed in Illinois." In fact, she had filed an affidavit showing that she "was nearing the age of 80, suffered chronic health problems including fibromyalgia and heart problems, often had difficulty walking, and had been hospitalized several times in recent months." However, this does not show that the forum she agreed to in 2001 "would be unreasonable or unjust." Her "conclusory statements are insufficient to establish such inconvenience."

The result is that the woman is bound by the forms signed when the brokerage account was opened, and cannot litigate her rights here in Texas, even though she is now older and in failing health.

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