SES Products, Inc. v. Aroma Classique, LLC and Michal R. Avraham

• Court: Court of Appeals of Texas
• Decided: June 6, 2013
• Docket: 01-12-00219-CV
• Status: Published

Opinion

Opinion issued June 6, 2013.

In The

Court of Appeals For The

First District of Texas ———————————— NO. 01-12-00219-CV ——————————— SES PRODUCTS, INC., Appellant V. AROMA CLASSIQUE, LLC AND MICHAL R. AVRAHAM, Appellees

On Appeal from the 334th District Court Harris County, Texas Trial Court Case No. 2011-41750

MEMORANDUM OPINION

SES Products, Inc. brought suit against Aroma Classique, LLC and Michal

R. Avraham for fraud, fraud in the inducement, and breach of a partnership

agreement. Avraham and Aroma Classique moved to dismiss the suit on the

grounds that a forum-selection clause and the doctrine of forum non conveniens limited jurisdiction to Israel. The trial court granted the motion to dismiss, and SES

appealed. We affirm.

Background

Avraham―an Israeli citizen―was the sole owner and proprietor of Aroma

Classique―a Texas limited liability company operating a kosher coffee bar and

café in Houston―until January 2011, when SES―an Arizona company having its

principal place of business in Houston and an additional place of business in Tel

Aviv, Israel―contracted to purchase fifty percent of Avraham’s interest in Aroma

Classique. The parties executed a partnership agreement, which was drafted in

Hebrew. The partnership agreement contains this forum-selection clause:

The Parties hereby agree that since both Parties are Israeli nationals and speak Hebrew then notwithstanding the location of the Partnership and Joint Venture in the United States this Agreement shall be governed by the laws of the State of Israel and the international jurisdiction shall be in Israel, at the competent court in Tel Aviv . . . .[ 1]

SES filed suit against Avraham and Aroma Classique, alleging that Avraham

misrepresented that she possessed all equipment, permits, licenses, and intellectual

1 The parties proffered competing English-language translations of the partnership agreement. The translation of the forum-selection clause used here is the translation provided by Avraham and Aroma Classique. SES’s translation differed with respect to the clause’s concluding language. Whereas Avraham and Aroma Classique asserted that jurisdiction “shall be in Israel,” SES asserted that jurisdiction “would be appropriate in the court of Tel Aviv.” Because SES’s contention on appeal is that the trial court erred in dismissing SES’s suit based on the translation urged by Avraham and Aroma Classique, we need not determine which translation is correct. 2 property necessary for the operation of Aroma Classique in Houston and for the

franchising of the business throughout the United States. SES asserted causes of

action for fraud, fraud in the inducement, and breach of the partnership agreement.

Avraham and Aroma Classique answered the lawsuit and filed a special

appearance, which their counsel later withdrew. Avraham and Aroma Classique

also moved to dismiss the lawsuit based on the forum-selection clause in the

partnership agreement and the common-law doctrine of forum non conveniens.

They asserted that the lawsuit should be heard in Israel. The trial court granted the

motion to dismiss and entered the following findings of fact and conclusions of

law:

A. The forum where [SES] filed this suit is not the proper forum for this cause of action because the parties entered a contract with a forum-selection clause opting for any dispute to be decided by Israeli law in Israel. [SES’s] claims are more properly heard in a forum outside of Texas.

B. An alternate forum exists in which [SES’s] cause of action may be tried.

C. The alternate forum offers an adequate remedy for [SES’s] cause of action.

D. Maintenance of [SES’s] cause of action in the courts of Texas would work a substantial injustice to the moving party.

E. The alternate forum is more appropriate because it provides an adequate remedy for the cause of action and can exercise jurisdiction over the defendant[s] [Avraham and Aroma Classique] properly joined to [SES’s] claims.

3 F. The claims in this suit are based upon a contract between the parties, written in Hebrew, [in] which both parties agreed that any dispute be governed by the laws of Israel and under the jurisdiction of the courts of Israel.

G. The balance of the private interests of the parties and the public interest of the state predominate in favor of [SES’s] actions being brought in an alternate forum, which shall include consideration of the extent to which an injury or death resulted from acts or omissions that occurred in this state.

1. The private interest of the parties will be furthered by this matter being brought in an alternative forum.

a. Access to sources of proof will be easier in the alternate forum.

b. The enforceability of the judgment equals or is better in the alternate forum than in Texas.

2. The public interests of the state would be furthered by this matter being considered in an alternate forum.

a. The administrative burden on the alternate forum is not as great as the burden on the Texas court.

b. The alternate forum has an interest in considering this matter that the court in Texas does not have.

c. The law of the alternate forum will control the disposition of this case.

H. The dismissal would not result in unreasonable duplication or proliferation of litigation.

Forum Non Conveniens

Because it is dispositive of this appeal, we begin by determining the

propriety of the dismissal of this case based on the common-law doctrine of forum

non conveniens. Forum non conveniens is an equitable doctrine exercised by 4 courts to prevent the imposition of an inconvenient jurisdiction on a litigant.

Vinmar Trade Fin., Ltd. v. Util. Trailers de Mex., S.A. de C.V., 336 S.W.3d 664

672 (Tex. App.―Houston [1st Dist.] 2010, no pet.) (citing Exxon Corp. v. Choo,

881 S.W.2d 301, 302 (Tex. 1994)). A trial court will exercise the doctrine of forum

non conveniens when the trial court determines that, for the convenience of the

litigants and witnesses and in the interest of justice, the action should be instituted

in another forum. Id.; see Quixtar Inc. v. Signature Mgmt. Team, LLC, 315 S.W.3d

28, 33 (Tex. 2010).

The United States Supreme Court developed the framework for analyzing

forum non conveniens in an international context in Piper Aircraft Co. v. Reyno,

454 U.S. 235, 102 S. Ct. 252 (1981). Courts must determine, first, whether an

alternative forum exists. Id. at 254 n.22, 102 S. Ct. at 265 n.22. Courts consider the

defendant’s amenability to service of process and the availability of an adequate

remedy in the alternative forum. See id.; In re Gen. Elec. Co., 271 S.W.3d 681, 688

(Tex. 2008) (orig. proceeding). Only if an alternative forum exists do courts

proceed to the second inquiry: which forum is best suited to the litigation. See

Piper Aircraft, 454 U.S. at 255, 102 S. Ct. at 265. In this second step, courts

consider whether the private and public interest factors set forth in Gulf Oil Corp.

v. Gilbert weigh in favor of dismissal. 330 U.S. 501, 508−09, 67 S. Ct. 839, 843

(1947). “[T]he ultimate inquiry is where a trial will best serve the convenience of

5 the parties and the interests of justice.” Koster v. Am. Lumbermens Mut. Cas. Co.,

330 U.S. 518, 527, 67 S. Ct. 828, 833 (1947).

The defendants―here, Avraham and Aroma Classique―bear the burden of

proof on all elements of the forum non conveniens analysis and must establish that

the balance of factors strongly weighs in favor of dismissal. See Vinmar Trade

Fin., Ltd., 336 S.W.3d at 672; RSR Corp. v. Siegmund, 309 S.W.3d 686, 710−11

(Tex. App.—Dallas 2010, no pet.); see also DTEX, LLC v. BBVA Bancomer, S.A.,

508 F.3d 785, 794 (5th Cir. 2007). The burden in opposing the plaintiff’s chosen

forum is heavy. Sinochem Int’l Co., Ltd. v. Malaysia Int’l Shipping Corp., 549 U.S.

422, 430, 127 S. Ct. 1184, 1191 (2007); Gulf Oil, 330 U.S. at 508, 67 S. Ct. at 843

(“[U]nless the balance is strongly in favor of the defendant, the plaintiff’s choice of

forum should rarely be disturbed.”); Quixtar, 315 S.W.3d at 31. Nonetheless, a

plaintiff’s choice of forum is not dispositive. Piper Aircraft, 454 U.S. at 255–56

n.23, 102 S. Ct. at 252 n.23; see DTEX, 508 F.3d at 795.

A. Standard of Review

A forum non conveniens determination is committed to the trial court’s

sound discretion. Quixtar, 315 S.W.3d at 31 (quoting Piper Aircraft, 454 U.S. at

257, 102 S. Ct. at 266). We reverse “only when there has been a clear abuse of

discretion; where the court has considered all the relevant public and private

interest factors, and where its balancing of these factors is reasonable, its decision

6 deserves substantial deference.” Id. (quoting Piper Aircraft, 454 U.S. at 257, 102

S. Ct. at 266). The mere fact that a trial judge may decide a discretionary matter in

a different manner than an appellate judge in a similar circumstance does not

demonstrate an abuse of discretion. Id. (quoting Downer v. Aquamarine Operators,

Inc., 701 S.W.2d 238, 242 (Tex. 1985)).

B. Adequacy of Israel as an alternative forum

For a case to be dismissed for forum non conveniens, there must be another

forum that could hear the case. Piper Aircraft, 454 U.S. at 254 n.22, 102 S. Ct. at

265 n.22. An alternative forum exists when it is both available and adequate. Saqui

v. Pride Cent. Am., LLC, 595 F.3d 206, 211 (5th Cir. 2010). An alternative forum

is available when the entire case and all the parties are subject to that forum’s

jurisdiction. Sarieddine v. Moussa, 820 S.W.2d 837, 841 (Tex. App.―Dallas 1991,

writ denied) (quoting Quintero v. Klaveness Ship Lines, 914 F.2d 717, 727 (5th

Cir.1990)). An alternative forum is adequate “if the parties will not be deprived of

all remedies or treated unfairly, even though they may not enjoy the same benefits

as they might receive in an American court.” In re Pirelli Tire, L.L.C., 247 S.W.3d

670, 678 (Tex. 2007) (quoting Vasquez v. Bridgestone/Firestone, Inc., 325 F.3d

665, 671 (5th Cir. 2003)).

Regarding Israel as an alternative forum, the trial court found that the parties

consented in the forum-selection clause to submit to Israel’s jurisdiction, that the

7 law of Israel governs, and that the law of Israel offers an adequate remedy for

SES’s claims. SES does not challenge any of those findings on appeal. That is,

SES does not dispute the enforceability of the forum-selection clause 2 or that Israel

is an available forum under the clause. Neither does SES argue that the substantive

law of Israel does not apply or that it would deprive SES of any remedy on its

claims. SES complains that the trial court erred in dismissing its claims because

Avraham and Aroma Classique did not satisfy their burden of showing that the

private and public interest factors weigh in favor of Israel as the more convenient

forum. Thus, we do not pass upon the issue of whether the trial court erred in

determining that Israel was an adequate alternative forum, and we turn instead to

the issue of whether the trial court acted within its sound discretion in determining

that the balance of factors weighed in favor of dismissal.

C. Private and public interest factors

In forum non conveniens dismissals, the well-known Gulf Oil factors direct

courts to consider both public and private concerns. Gulf Oil, 330 U.S. at 508−09, 2 While SES does not challenge the validity or enforceability of the forum-selection clause, SES does dispute the clause mandates litigation in Israel. SES contends that the forum-selection clause is permissive―not mandatory―because it does not state that jurisdiction in Israel is exclusive and therefore does not require dismissal of lawsuits filed in jurisdictions other than Israel. According to SES, the parties agreed in the forum-selection clause only to submit to proceedings in Israel despite any personal jurisdiction, venue, or forum non conveniens objections they might otherwise have. SES disputes that the parties agreed that all lawsuits must be filed in Israel. We do not reach the mandatory or permissive nature of the forum- selection clause because we conclude, for the reasons stated in this opinion, that dismissal was proper based on forum non conveniens. 8 67 S. Ct. at 843. Private considerations include: (1) the “relative ease of access to

sources of proof”; (2) the “availability of compulsory process for attendance of

unwilling, and the cost of obtaining attendance of willing, witnesses”; (3) the

“possibility of view of premises, if view would be appropriate to the action”; (4)

the “enforceability of a judgment” once obtained; and (5) “all other practical

problems that make trial of a case easy, expeditious and inexpensive.” Id. at 508,

67 S. Ct. at 843. Public considerations include: (1) “[a]dministrative difficulties . . .

for courts when litigation is piled up in congested centers instead of being handled

at its origin”; (2) the burden of “jury duty . . . that ought not to be imposed upon

the people of a community which has no relation to the litigation”; (3) “local

interest in having localized controversies decided at home”; and (4) avoiding

conflicts of law issues. Id. at 508−09, 67 S. Ct. at 843.

The Texas Supreme Court made clear in Quixtar that a court of appeals

should not conduct a de novo review of the evidence by mechanically reweighing

each forum non conveniens factor. 315 S.W.3d at 35; see also O’Keefe v. Noble

Drilling Corp., 347 Fed. Appx. 27, 30–31 (5th Cir. 2009) (“In reviewing forum

non conveniens decisions, our duty is to review the lower court’s decision making

process and conclusion and determine if it is reasonable; our duty is not to perform

a de novo analysis and make the initial determination for the district court.”). The

Quixtar court emphasized the United States Supreme Court’s purposeful refusal to

9 “lay down a rigid rule to govern [a trial court’s] discretion” in these cases because

“[e]ach case turns on its facts.” 315 S.W.3d at 34 (quoting Piper Aircraft, 454 U.S.

at 249, 102 S. Ct. at 263). Giving any one factor too much weight loses much of

the flexibility that makes the forum non conveniens doctrine so valuable. Id. (citing

Piper Aircraft, 454 U.S. at 249–50, 102 S. Ct. at 263). Admittedly, the various

factors weighed by the trial court “may be difficult to quantify.” Id. at 35.

Regarding the proof required, the party seeking dismissal for forum non

conveniens must provide enough information for the trial court to balance the

parties’ interests. Piper Aircraft, 454 U.S. at 258–59, 102 S. Ct. at 267 (holding

sufficient affidavits describing evidentiary problems defendants would face if trial

held in United States). However, the evidence need not be overly detailed. See,

e.g., id. (explaining that defendants need not “submit affidavits identifying

witnesses they would call and the testimony these witnesses would provide if the

trial were held in the alternative forum”); Quixtar, 315 S.W.3d at 35 (explaining

that defendant need not provide detailed quantification of costs).

With these principles in mind, we review the record to determine whether

the trial court acted within its sound discretion in determining that the balance of

the factors favored dismissal. See Quixtar, 315 S.W.3d at 34.

SES sued Avraham and Aroma Classique for fraud, fraud in the inducement,

and breach of the partnership agreement. SES contends that Avraham

10 misrepresented matters pertaining to the operation of a café in Houston, including

that Aroma Classique had all necessary equipment, permits, licenses, and

intellectual property rights necessary to operate its business and to franchise the

business throughout the United States, and that SES invested in Aroma Classique

as a result of such misrepresentations. SES further alleges that Avraham’s

misrepresentations constitute a breach of the parties’ partnership agreement.

Avraham and Aroma Classique supported their motion to dismiss these

claims for forum non conveniens with Avraham’s affidavit, the partnership

agreement, and a demand letter sent to Avraham by Israeli counsel for SES.

Avraham and Aroma Classique provided the original Hebrew texts of the

partnership agreement and demand letter and English-language translations of

those documents. Avraham’s affidavit contains a number of averments regarding

the private interest factors: (1) Avraham is an Israeli citizen, (2) the individual

owners of SES are Israeli citizens, (3) the parties intended by execution of the

forum-selection clause to resolve their disputes in Israel, (4) the agreement that is

the subject of the dispute and other supporting documents are drafted in Hebrew,

(5) the law of Israel will govern the dispute, (6) all of the witnesses are Israeli

citizens, and (7) any claims Avraham and Aroma Classique might have against

SES could only be pursued in Israel. SES did not offer any evidence contradicting

Avraham’s affidavit.

11 Avraham’s affidavit provided the trial court with minimal information with

which to balance the private interest factors. First, SES’s petition alleges that

Avraham resides in Houston, Aroma Classique is a Texas limited liability

company having its principal place of business in Houston, SES has its principal

place of business in Houston, and the café the parties sought to operate jointly is

located in Houston. Avraham did not dispute any of those allegations; she stated in

her affidavit only that she and the individual owners of SES are Israeli citizens.

She did not make any statement regarding her residence.3 Second, Avraham did

not assist the trial court in determining the access to sources of proof or the

expense of securing witness testimony. She stated that all of the witnesses are

Israeli citizens, but she did not indicate whether the witnesses lived in Israel and

would be required to travel or whether they would require an English-language

translator to testify before a Texas jury. Neither did she make any averment that

other sources of proof are available only in Israel. Finally, her assertion that any

claims she or Aroma Classique may have against SES can only be pursued in Israel

is not supported by any underlying facts regarding what those claims might be or

why they would not be available in Texas. But see Quixtar, 315 S.W.3d at 35

(criticizing appellate court for considering defendant’s failure to raise choice of

law issues as factor weighing against dismissal). On the other hand, although SES

3 We note that Avraham is described as a dual citizen of the United States and Israel in the special appearance filed and then withdrawn by Avraham. 12 did not bear the burden of proof, it did not identify any witnesses, documents, or

other proof that would be unavailable if the lawsuit were to proceed in Israel.

Regarding the public interest factors, we note that there is no evidence of the

trial court’s case load or administrative burden and that Texas jurors certainly have

some interest in resolving a dispute between companies operating in Texas.

However, Avraham pointed to important facts that make Texas a less convenient,

and perhaps more expensive, forum than Israel―the controlling document and

other correspondence were drafted in Hebrew and the law of Israel governs the

case. SES’s demand letter was sent to Avraham in Hebrew by an attorney in Israel.

The demand letter characterizes Avraham’s relationship with Pillsbury Israel as

one of the main reasons SES invested in Aroma Classique, and raises issues

concerning whether Avraham misrepresented that she was “the sole representative

in Texas for marketing part of the bakery products line of the Pillsbury company

from Israel” and held exclusive licensing and franchising rights from Pillsbury

Israel. It logically follows that litigating SES’s claims in Texas necessitates the

expense of translation of documents and retention of Israeli law experts. Citing

federal authorities, this Court has previously noted that “‘[e]ven the possibility that

foreign law applies to a dispute is sufficient to warrant dismissal on forum non

conveniens grounds.’” Vinmar Trade Fin., 336 S.W.3d at 679 (quoting Warter v.

Boston Secs., S.A., 380 F. Supp. 2d 1299, 1315 (S.D. Fla. 2004), and citing Sigalas

13 v. Lido Maritime, Inc., 776 F.2d 1512, 1519 (11th Cir. 1985) (indicating that need

to untangle conflicts of law problems weighs in favor of dismissal), and Proyectos

Orchimex de Costa Rica, S.A. v. E.I. du Pont de Nemours & Co., 896 F. Supp.

1197, 1204 (M.D. Fla. 1995) (concluding that possibility that foreign law applies

weighs strongly in favor of dismissal)). The fact that the parties consented to

submit to Israel’s jurisdiction also favors dismissal of SES’s claims. Cf. In re Int’l

Profit Assocs., Inc., 274 S.W.3d 672, 680 (Tex. 2009) (observing that, by agreeing

to forum-selection clause, parties represent that agreed forum is not so

inconvenient to deprive parties of their day in court).

This record establishes that Israel is an available and adequate forum.

Although Avraham and Aroma Classique’s evidentiary showing under the private

interest factors could have been stronger, we bear in mind that the Gulf Oil factors

provide for a flexible inquiry, with no one factor being dispositive. Given the

evidence of the public interest factors, the trial court’s balancing of all the factors

was reasonable. See Quixtar, 315 S.W.3d at 33; Piper Aircraft, 454 U.S. at 249–

50, 102 S. Ct. at 263. We conclude that the trial court’s dismissal of the case based

on forum non conveniens was not an abuse of discretion.

14 Conclusion

We affirm the trial court’s judgment.

Harvey Brown Justice

Panel consists of Chief Justice Radack and Justices Higley and Brown.