Vertical Computer Systems, Inc. v. Wolman
4:24-cv-00395
| E.D. Tex. | Sep 18, 2025Background
- Plaintiffs Vertical Computer Systems Inc. and NOW Solutions, Inc. allege Wolman and the DHC law firm breached fiduciary duties and engaged in a racketeering scheme involving Wade.
- Plaintiffs filed suit on May 7, 2024 asserting fraudulent inducement, breach of fiduciary duty, conspiracy, and RICO claims, plus declaratory relief regarding a 2017 New York judgment.
- Defendants moved on August 9, 2024 to dismiss or, alternatively, transfer venue under 28 U.S.C. § 1404(a), arguing improper venue, res judicata, and forum-selection clauses.
- The court analyzes enforceability of forum-selection clauses and, if enforceable, applies Atlantic Marine and related authorities to transfer to the Southern District of New York.
- The court grants the motion in part and transfers the case to the Southern District of New York, applying the forum-selection clause as controlling.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Enforceability of forum-selection clauses | Plaintiffs contend clauses may be invalid due to fraud/overreach against the clauses themselves | Defendants contend fraud/overreach must target the forum clauses themselves; general contract fraud not enough | Enforceable; fraud/overreach not shown to target the clauses themselves |
| Appropriateness of transfer under §1404(a) | Transfer would undermine plaintiffs' chosen forum; clauses control | Transfer appropriate under enforceable clauses; NY forum preferred | Transfer proper; clauses control the §1404(a) analysis |
| Public-interest factors after enforceable clause | Transfer would burden local interests; Texas connection strong | Public factors favor NY due to congestion, familiarity, and conflicts with foreign law avoided | Two public factors favor transfer; no extraordinary circumstances defeat transfer |
Key Cases Cited
- Atl. Marine Const. Co. v. U.S. Dist. Court for W. Dist. of Tex., 571 U.S. 49 (2013) (forum-selection clauses control in transfer analysis)
- Volkswagen AG v. Howery, 371 F.3d 201 (5th Cir. 2004) (threshold inquiry for §1404(a) transfer; venue primacy matters)
- In re Volkswagen of Am., Inc., 545 F.3d 304 (5th Cir. 2008) (forum-selection clause impact on transfer analysis; presumptively valid)
- Weber v. PACT XPP Tech., AG, 811 F.3d 758 (5th Cir. 2016) (determines whether forum-selection clause is mandatory or permissive and scope)
- Scherk v. Alberto-Culver Co., 417 U.S. 506 (1974) (fraud/overreach analysis for forum-selection clauses)
- Bremen v. Zapata Offshore Co., 407 U.S. 1 (1972) (forum-selection clauses are presumptively valid)
- Carnival Cruise Lines, Inc. v. Shute, 499 U.S. 585 (1991) (forum-selection clauses presumptively valid even without arm's-length bargaining)
- Haynsworth v. The Corp., 121 F.3d 962 (5th Cir. 1997) (fraud/overreach showing required to defeat clause)
- Niemi v. Lasshofer, 770 F.3d 1331 (10th Cir. 2014) (fraud-related forum-selection clause challenges require direct link to clause)