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In Re Cornerstone Healthcare Holding Group, Inc.
348 S.W.3d 538
| Tex. App. | 2011
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Background

  • Mariner sold a hospital chain to Holdco LLC for $161 million via an Asset Purchase Agreement (APA); Cornerstone later acquired Holdco’s rights and assumed the APA rights, including the Note.
  • Holdco issued a $10 million promissory note to Mariner, secured by the same transaction; the Note is tied to the APA.
  • In 2007, Highland obtained >$55 million of Cornerstone’s debt and the hospitals’ ownership was transferred to Highland under a Restructuring Agreement; Mariner was not a party to that restructuring.
  • In 2010, Mariner sued Highland, Cornerstone, and Holdco for fraudulent transfer seeking to void the restructuring or obtain payment on the Note.
  • Cornerstone and Highland moved to dismiss under forum-selection clauses directing disputes to New York County, New York; the trial court denied the motion.
  • Relators seek mandamus relief asserting the trial court abused its discretion by not enforcing the forum-selection clause.

Issues

Issue Plaintiff's Argument Defendant's Argument Held
Which forum-selection clause controls? Mariner argues the Note’s clause governs as narrower; the APA’s clause controls if applicable. Relators contend the APA clause is implicated and harmonized with the Note; both point to New York forum. Mariner's claims fall under the Note, and the combined clauses require New York forum.
Who can enforce the forum-selection clause? Mariner argues only signatories can enforce; relators lack standing to enforce the clause. Relators contend they can enforce as assignee or via equitable estoppel. Highland may enforce via equitable estoppel; Cornerstone’s right to enforce as assignee remains unresolved on record.
Is equitable estoppel available to enforce the forum clause against Mariner? Mariner alleges interdependent misconduct among Holdco, Cornerstone, and Highland to trigger estoppel. Relators rely on Meyer/Deep Water Slender Wells theories; Mariner seeks to compel arbitration/relocation. Equitable estoppel applies to enforce the forum-selection clause against Mariner, enabling enforcement by Highland.
Does the APA consent-to-jurisdiction clause apply to Mariner’s suit? Majority treats the APA clause as broad enough to apply to Mariner’s fraud claims. Mariner argues Wilmer Cutler and related authorities limit broad consent-to-jurisdiction to the specific contract. The trial court’s failure to enforce the clause is corrected by mandamus; clause applies to the dispute.

Key Cases Cited

  • In re Prudential Ins. Co., 148 S.W.3d 124 (Tex.2004) (orig. proceeding; forum-selection clauses generally enforceable)
  • In re Laibe Corp., 307 S.W.3d 314 (Tex.2010) (forum-selection clauses presumptively valid; proper interpretation binds forum)
  • In re AIU Ins. Co., 148 S.W.3d 109 (Tex.2004) (orig. proceeding; adequate remedy when trial court refuses to enforce clause)
  • Meyer v. WMCO-GP, L.L.C., 211 S.W.3d 302 (Tex.2006) (equitable estoppel bases for nonsignatories to compel compliance; two scenarios)
  • In re Kellogg Brown & Root, Inc., 166 S.W.3d 732 (Tex.2005) (direct-benefit estoppel; estopped nonsignatories from seeking contract benefits while avoiding burdens)
  • Wilmer Cutler Pickering Hale & Dorr LLP, no official reporter; mem. opin. (Tex. App. Dallas 2008) (distinguished; not addressing due to WL citation in the cited discussion)
  • RSR Corp. v. Siegmund, 309 S.W.3d 686 (Tex. App.-Dallas 2010) (distinguishes consent-to-jurisdiction vs. forum-selection scope; applies to mixed documents)
  • In re Merrill Lynch Trust Co., FSB, 235 S.W.3d 185 (Tex.2007) (equitable estoppel limits involving concerted misconduct; arbitration context)
  • Jim Walter Homes, Inc. v. Schuenemann, 668 S.W.2d 324 (Tex.1984) (principles of construing integrated transactions)
Read the full case

Case Details

Case Name: In Re Cornerstone Healthcare Holding Group, Inc.
Court Name: Court of Appeals of Texas
Date Published: Aug 18, 2011
Citation: 348 S.W.3d 538
Docket Number: 05-11-00634-CV
Court Abbreviation: Tex. App.