ZEM H.B. 2547 75(R)BILL ANALYSIS


CIVIL PRACTICES
H.B. 2547
By: Dutton
5-6-97
Committee Report (Amended)



BACKGROUND 

The U. S. Supreme Court in the case of M/S Bremen v. Zapata Off-Shore Co.,
407 U.S. 1 (1972) has upheld the validity and expressed its approval for
forum and venue selection clauses. Likewise, the vast majority of states,
either by judicial decision or direct legislative action, have upheld such
clauses based on the traditional notion of freedom of contract and, in
particular, the parties' desire to select convenient locations to resolve
disputes between them.  The recent trend in Texas has, also, been to
confirm the validity of such clauses.  Barnette v. United Research
Company, Inc., 823 S.W.2d 368 (Tex.App.-Dallas, 1991, writ den'd).
However, other older Texas cases have read our venue statutes as
prohibiting parties from agreeing in advance to bring litigation over
future disputes in a particular court where the statute permits or
requires the action to be brought in another court.  This confusion in
Texas law as to whether forum or venue selection clauses are enforceable
makes it impossible for the parties to large commercial transactions to
insure that they are free to decide among themselves where disputes
between them should be litigated.  This bill would eliminate this
confusion, resolve Texas law by confirming the holding in Barnette, and
clarify that parties to large commercial transactions are free to contract
on venue issues.   

PURPOSE

The bill amends the Texas Civil Practice & Remedies Code to provide that
in transactions with a value of one million dollars or more, contracting
parties may agree to make venue proper in a particular location for
lawsuits arising out of the transaction or may agree to make venue
improper in a particular county of this State, notwithstanding other
permissive or mandatory provisions of the Civil Practice & Remedies Code.
The bill applies only to commercial transactions with an aggregate value
equal to or greater than one million dollars and only in cases where the
parties have agreed in writing to the question of proper or improper
venue. 

RULEMAKING AUTHORITY

It is the committee's opinion that this bill does not expressly grant any
additional rulemaking authority to a state officer, department, agency or
institution. 

SECTION BY SECTION ANALYSIS

SECTION 1.  Amends Subchapter B, Chapter 15, Civil Practices & Remedies
Code, by adding Section 15.019 as follows: 

 (a) defines "major transaction" as a transaction or series of
transactions with an aggregate value equal to or greater than one million
dollars, excluding any transaction or series of transactions entered into
primarily for personal, family or household purposes.   

 (b) provides that an action arising out of such a major transaction shall
be brought in a county if the parties to the transaction have agreed in
writing that a suit arising therefrom may be brought in that county.   

 (c) provides that such an action may not be brought in a county if the
parties to the major transaction have agreed in writing that it may not be
so brought or have agreed in writing that it  must be brought in another
county or another jurisdiction.   

 (d) exempts actions from application of this section if the underlying
agreement was unconscionable at the time it was made, if the agreement has
been voided under   35.52 of the Texas Business & Commerce Code (Law
Applicable to Construction Contracts) or where mandatory venue of the
action is established under a statute other than in the Civil Practice &
Remedies Code. 

 (e) clarifies that this section does not affect venue and jurisdiction in
actions that do not arise from major transactions. 

SECTION 2. Applies prospectively; savings clause.

SECTION 3. Emergency clause; effective date: upon passage.


EXPLANATION OF AMENDMENTS

Committee Amendment #1 clarifies that the term "major transaction" does
not include a transaction or series of transactions entered into primarily
to settle a personal injury claim. 

Committee Amendment #2 clarifies that the section does not apply if the
agreement was "voidable", instead of "voided", under Sec. 35.52, Business
& Commerce Code.