In Pinto Tech. Ventures, L.P. v. Sheldon, the Texas Supreme Court held that business tort claims, including breach of fiduciary duty, were subject to a forum-selection clause in a shareholders agreement. No. 16-0007, 2017 WL 2200357, at *9 (Tex. May 19, 2017). The plaintiffs, two shareholders, asserted business tort claims related to the alleged dilution of their equity interests against the majority shareholders and certain corporate officers. Id. at *2. The shareholders agreement included a forum selection clause in which the parties agreed to resolve “any dispute arising out of this Agreement” in Delaware. Id. at *3. The shareholders asserted no contract claims, and instead, asserted claims for fraud, breach of fiduciary duty, minority-shareholder oppression, Texas Blue Sky Law violations, and conspiracy. Id. The defendants moved to dismiss based on the forum-selection clause, and the trial court granted the motion. Id. at *3-4. In a split decision, the court of appeals reversed, holding the forum-selection clause inapplicable to the dispute because an “arising out of” forum-selection clause applies only when the claims would not exist “but for” the agreement containing the clause. Id. at *4. The court determined that the shareholders’ claims did not arise out of the agreement because the rights and obligations underlying the claims were derived from statutes and common law. Id.

The Texas Supreme Court reversed and held that the shareholders’ business tort claims were subject to the forum-selection clause. Id. at *9. The Court noted that the use of the term “dispute” instead of “claim” in the clause established that the clause applied beyond claims for breach of the agreement. Id. at *7. “Dispute” refers to a conflict or controversy whereas a “claim” means the assertion of an existing right or a demand for money, property, or a legal remedy to which one asserts a right. Id. The Court also held that a but-for relationship between the disputes and the shareholders agreement was “evident” because the shareholders’ extra-contractual statutory and tort claims involved the same operative facts as a breach of contract claim and related to rights purportedly promised under the agreement. Id. at *8. As the Court noted, the non-contractual claims were “integral to the dispute’s resolution” and, although “shareholders and corporations can have relationships without an agreement like the one at issue here, we cannot ignore the reality that an agreement, in fact, governs their relationship and Sheldon’s and Konya’s alleged grievances emanate from the existence and operation of that agreement.” Id. at *9. The Court reversed the court of appeals and affirmed the trial court’s dismissal as to the majority shareholder defendants: “we hold that the [minority] shareholders’ statutory and common-law tort claims evidence a ‘dispute arising out of’ the shareholders agreement because (1) the existence or terms of the agreement are operative facts in the litigation and (2) ‘but for’ that agreement the shareholders would not be aggrieved.”

The Court then held that defendants who were nonparties to the shareholder agreement (the CEO and CFO) could not enforce the forum-selection clause in the agreement. The Court held that they were not parties to the agreement, were not transaction participants, and that the concerted-misconduct doctrine did not apply.

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Photo of David Fowler Johnson David Fowler Johnson

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David maintains an active trial and appellate practice and has consistently worked on financial institution litigation matters throughout his career. David is the primary author of the The Fiduciary Litigator blog, which reports on legal cases and issues impacting the fiduciary…

[email protected]

David maintains an active trial and appellate practice and has consistently worked on financial institution litigation matters throughout his career. David is the primary author of the The Fiduciary Litigator blog, which reports on legal cases and issues impacting the fiduciary field in Texas. Read More

David’s financial institution experience includes (but is not limited to): breach of contract, foreclosure litigation, lender liability, receivership and injunction remedies upon default, non-recourse and other real estate lending, class action, RICO actions, usury, various tort causes of action, breach of fiduciary duty claims, and preference and other related claims raised by receivers.

David also has experience in estate and trust disputes including will contests, mental competency issues, undue influence, trust modification/clarification, breach of fiduciary duty and related claims, and accountings. David’s recent trial experience includes:

  • Representing a bank in federal class action suit where trust beneficiaries challenged whether the bank was the authorized trustee of over 220 trusts;
  • Representing a bank in state court regarding claims that it mismanaged oil and gas assets;
  • Representing a bank who filed suit in probate court to modify three trusts to remove a charitable beneficiary that had substantially changed operations;
  • Represented an individual executor of an estate against claims raised by a beneficiary for breach of fiduciary duty and an accounting; and
  • Represented an individual trustee against claims raised by a beneficiary for breach of fiduciary duty, mental competence of the settlor, and undue influence.

David is one of twenty attorneys in the state (of the 84,000 licensed) that has the triple Board Certification in Civil Trial Law, Civil Appellate and Personal Injury Trial Law by the Texas Board of Legal Specialization.

Additionally, David is a member of the Civil Trial Law Commission of the Texas Board of Legal Specialization. This commission writes and grades the exam for new applicants for civil trial law certification.

David maintains an active appellate practice, which includes:

  • Appeals from final judgments after pre-trial orders such as summary judgments or after jury trials;
  • Interlocutory appeals dealing with temporary injunctions, arbitration, special appearances, sealing the record, and receiverships;
  • Original proceedings such as seeking and defending against mandamus relief; and
  • Seeking emergency relief staying trial court’s orders pending appeal or mandamus.

For example, David was the lead appellate lawyer in the Texas Supreme Court in In re Weekley Homes, LP, 295 S.W.3d 309 (Tex. 2009). The Court issued a ground-breaking opinion in favor of David’s client regarding the standards that a trial court should follow in ordering the production of computers in discovery.

David previously taught Appellate Advocacy at Texas Wesleyan University School of Law located in Fort Worth. David is licensed and has practiced in the U.S. Supreme Court; the Fifth, Seventh, and Eleventh Federal Circuits; the Federal District Courts for the Northern, Eastern, and Western Districts of Texas; the Texas Supreme Court and various Texas intermediate appellate courts. David also served as an adjunct professor at Baylor University Law School, where he taught products liability and portions of health law. He has authored many legal articles and spoken at numerous legal education courses on both trial and appellate issues. His articles have been cited as authority by the Texas Supreme Court (twice) and the Texas Courts of Appeals located in Waco, Texarkana, Beaumont, Tyler and Houston (Fourteenth District), and a federal district court in Pennsylvania. David’s articles also have been cited by McDonald and Carlson in their Texas Civil Practice treatise, William v. Dorsaneo in the Texas Litigation Guide, and various authors in the Baylor Law ReviewSt. Mary’s Law JournalSouth Texas Law Review and Tennessee Law Review.

Representative Experience

  • Civil Litigation and Appellate Law