Forum Selection Clause Sends Texas Property Damage Claim to New York

Chandler Management sued First Specialty Insurance after the insurer denied coverage of a claim for wind and hail damage at a Dallas apartment complex managed by Chandler. The insurer moved to dismiss based on a forum selection clause in the policy that provided for exclusive jurisdiction in New York. The Dallas Court of Appeals affirmed the trial court’s dismissal order, without prejudice to refiling in New York. The Court found no error in the trial court’s decision to dismiss the claims against two additional defendants because they had expressly agreed to the insurer’s motion and because the claims against them were also based on the insurance contract. The insurer also established that the policy was procured through a licensed agent, which allowed First Specialty to issue surplus lines insurance in Texas (and therefore allowed it to enforce the contract against its insured). The Court shrugged off a number of claimed failures of the policy under the Insurance Code, holding that noncompliance with those provisions did not affect enforcement of the contract because nothing showed that they were “material and intentional” violations. Finally, the Court rejected Chandler’s arguments that the forum selection clause was overreaching and against public policy.

Chandler Mgmt. Corp. v. First Specialty Ins. Corp., No. 05-13-01044-CV