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.