533 F.Supp.3d 394
E.D. Tex.2021Background
- Plaintiff Stellar Restoration sued over a Restoration Services Agreement containing a forum-selection clause designating Collin County, Texas as exclusive venue.
- Courtney signed the Agreement as “President” of the “Customer,” defined in the Agreement as "Chestnut Plaza Condo Assoc."
- JC Enterprises (Courtney’s company) holds title to condominium unit at 1950 E. Chestnut Expy; Courtney also registered the fictitious name “Chestnut Plaza Condominiums.”
- The insurance Policy in the record names “Chestnut Plaza Condominiums” and appears to cover buildings 1950–1980, while the Agreement’s Subject Property references only building 1950 and “22Ksf of standing seam.”
- Magistrate Judge recommended denying defendants’ motion to dismiss and to transfer; District Court conducted de novo review, adopted the Report, and denied defendants’ motion to dismiss.
- Court held the Agreement is ambiguous as to (a) the meaning of “and/or,” (b) the identity of the owner of the Subject Property/Policy, and (c) the scope of the Subject Property; these are factual questions for discovery, so Courtney and JC Enterprises are bound for jurisdictional purposes at this stage.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Courtney and JC Enterprises are bound by the forum-selection clause | Agreement’s language (including references to owner of Subject Property/Policy and the party signing) can bind Courtney/JC Enterprises; ambiguities permit factual inquiry and binding for jurisdictional purposes | Courtney signed only in representative capacity (as Association President); “and/or” should be read as limiting signatory to representative capacity, so Courtney/JC not bound | Court: Agreement ambiguous; identity of owner/subject property unresolved; ambiguity raises factual issues; at this early stage Courtney and JC Enterprises are treated as bound for jurisdictional purposes and dismissal denied |
| Whether contractual ambiguity requires dismissal or compels construction against plaintiff now (contra proferentem) | Plaintiff: ambiguity permits extrinsic evidence and factual development; contra proferentem is a last resort and premature pre-discovery | Defendants: ambiguity is fatal to Plaintiff’s jurisdictional argument and should be resolved in defendants’ favor now; alternatively, ambiguities should be construed against drafter (contra proferentem) | Court: Contra proferentem raised belatedly and is inappropriate at motion-to-dismiss stage; ordinary rules and extrinsic evidence must be explored in discovery before resorting to contra proferentem; dismissal denied |
Key Cases Cited
- Cicciarella v. Amica Mut. Ins. Co., 66 F.3d 764 (5th Cir. 1995) (once a contract provision is ambiguous, determining meaning and intent is a question of fact)
- National Union Fire Ins. Co. v. CBI Indus., Inc., 907 S.W.2d 517 (Tex. 1995) (ambiguous contract permits consideration of extrinsic evidence to determine meaning)
- R & P Enters. v. LaGuarta, Gavrel & Kirk, Inc., 596 S.W.2d 517 (Tex. 1980) (same principle allowing extrinsic evidence when contract ambiguous)
- Taylor v. Investors Associates Inc., 29 F.3d 211 (5th Cir. 1994) (silence of clause as to particular parties precludes binding those parties under arbitration context; cited to distinguish present case where owners are explicitly named)
- ACE Am. Ins. Co. v. Freeport Wielding & Fabricating, Inc., 699 F.3d 832 (5th Cir. 2012) (contra proferentem is a last-resort rule applied after ordinary construction leaves reasonable doubt)