USA – TEXAS Trends and Developments Contributed by: Stephen Melendi, Aaron Mitchell, Lisa Songy and Matt Rigney, Tollefson Bradley Mitchell & Melendi, LLP
inconvenience. New York was not some remote alien forum that would deprive the insured of his day in court or discourage him from bringing his claims. The Court also found no evidence of fraud or over- reaching for the insurance contract to contain a New York forum selection clause and held that mandamus relief was appropriate because subjecting a party to trial in a forum other than the one agreed upon, and requiring an appeal to vindicate the rights granted in a forum selection clause, is harassing in nature and only benefits the breaching party. Yet they continue to be challenged by insureds Despite this two-decade-old precedent, insureds con- tinue to challenge forum selection clauses. In a pend- ing case in Hidalgo County, Texas District Court styled IDEA Public Schools v Westchester Surplus Lines Ins. Co., et al. , No C-3463-24-B, the district court denied a group of insurers’ motion to dismiss pursuant to a New York forum selection clause in the policies. The insurers argued that, much like In re AIU , the insur - ance tower’s New York forum selection clause was enforceable because, among other things, litigating a case between numerous large insurers and a school district in New York would not be a significant incon- venience. Further, there was no evidence of fraud or overreaching. However, the district court disagreed, denying the motion to dismiss and allowing the case to continue in Texas, though it did not specify its rea- soning. The insurers filed a mandamus petition (a form of inter- locutory appeal) to the intermediate court of appeals, which affirmed the district court’s decision. The inter- mediate court did not address the substantive issue, however, merely holding that the insurers did not meet their burden to warrant mandamus relief. The insur- ers then filed a subsequent mandamus petition to the Supreme Court of Texas. That petition is pending as of the date of publication of this article. What the Court does in response to this petition may have dramatic effects on the enforceability of forum selection clauses in Texas. Enforcing the pro- vision would re-affirm the Court’s prior opinion in In re AIU and other cases enforcing these contractual provisions. This may discourage future litigants from
challenging similar forum selection clauses in large first-party cases. However, if the Court reverses, mod- ifies or distinguishes its holding in In re AIU , it could change the litigation landscape in Texas. If this hap- pens, insurers may need to re-evaluate whether they include forum selection clauses in policies or invoke them, given that litigation costs will quickly increase due litigation of this issue at the onset of a case. Freight broker liability – will the US Supreme Court limit claims against freight brokers, and will that result in lower settlement demands to brokers and their insurers? In the last several years, Texas and other locales in the United States have seen a significant increase in large verdicts arising out of commercial transportation accidents. These verdicts have also involved different types of entities named as defendants, as claimants have sought to hold not only the trucking company and its drivers accountable, but they have asserted claims against freight brokers, despite the law in cer- tain jurisdictions that such claims are pre-empted by federal law. The scope of federal pre-emption is pres- ently before the United States Supreme Court in the matter styled Montgomery v Caribe Transport II, LLC, et al. , No 24-1238. The law of Texas and other jurisdictions arguably permits freight broker liability based upon a negligent entrustment standard, while the federal standards should pre-empt these claims in matters where federal jurisdiction controls. In many ways, the proliferation of claims against freight brokers is a result of the sig- nificant increase in commercial trucking verdicts and settlements in Texas. And this issue is of particular importance in Texas, which the data shows has the highest volume of freight moving along its roadways in the United States, and the highest volume of fatal trucking accidents. This lack of certainty makes responding to the time- limited demands under the Stowers doctrine espe- cially problematic for freight brokers and their insurers. In short, Texas law, pursuant to G.A. Stowers Fur - niture Co. v American Indem. Co. , 15 S.W.2d 544 (Tex. Comm’n App. 1929, holding approved), places a tort duty on liability insurers to respond to reason-
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