Sierra Frac v. CDE Global

IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT

No. 19-40489

SIERRA FRAC SAND, L.L.C.,

Plaintiff - Appellant

v.

CDE GLOBAL LIMITED,

Defendant - Appellee

Appeal from the United States District Court
for the Eastern District of Texas

Before OWEN, Chief Judge, and SOUTHWICK and OLDHAM, Circuit Judges.
LESLIE H. SOUTHWICK, Circuit Judge:
The plaintiff sued for fraud, misrepresentation, and breach of contract.
The defendant moved to dismiss under the doctrine of forum non conveniens,
relying on a forum-selection clause found in a document external to, but
incorporated into, the parties’ contract. The district court enforced the forum-
selection clause and dismissed. We AFFIRM.

FACTUAL AND PROCEDURAL BACKGROUND
“Frac sand” is a naturally occurring form of sand with properties that
make it particularly useful to the oil and gas industry in the process of
“hydraulic fracturing,” or “fracking.” The plaintiff, Sierra Frac Sand, L.L.C.,
is a limited liability company based in Texas that produces frac sand. In May
United States Court of Appeals
Fifth Circuit
FILED
May 26, 2020

Lyle W. Cayce
Clerk
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2017, Sierra contracted with the defendant, CDE Global Limited, a Northern
Irish company, to design, deliver, and assemble sand-processing equipment for
Sierra’s Louisiana-based processing facility. On each page of the parties’ final
agreement is a banner containing the CDE logo and the words “Order
Acknowledgement CDE Global General Conditions – July 2017.” Above the
signature blocks in the agreement is the following language: “This Order
Acknowledgement is subject to the Standard Terms and Conditions of Sale of
CDE Global Limited. A copy of our Standard Terms and Conditions of Sale is
available upon request.”
When construction of the plant took longer than expected, Sierra filed
suit against CDE in the United States District Court for the Eastern District
of Texas, asserting claims of fraud, misrepresentation, and breach of contract.
CDE moved to dismiss on several grounds, including forum non conveniens. It
argued that the document referred to in the order acknowledgment was a 2016
addendum titled “CDE General Conditions – June 2016,” and that the
addendum was effectively incorporated into the order acknowledgment. The
addendum includes a forum-selection clause providing for the “exclusive
jurisdiction of the Courts of Northern Ireland.” Although Sierra never asked
for a copy of the “Standard Terms and Conditions of Sale” during negotiations,
Sierra argued that the 2016 addendum was not the incorporated document.
Relying on Texas contract law, the district court determined that the
parties had in fact incorporated the forum-selection clause into the agreement.
It concluded that the balancing factors for forum non conveniens analysis
weighed in favor of dismissal. The district court dismissed the case without
prejudice. Sierra timely appealed.

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DISCUSSION
“A federal court sitting in diversity applies the federal law of forum non
conveniens in deciding a motion to dismiss in favor of a foreign forum.” DTEX,
LLC v. BBVA Bancomer, S.A., 508 F.3d 785, 793 (5th Cir. 2007). Forum non
conveniens is a common law doctrine that promotes convenient trials. Piper
Aircraft Co. v. Reyno, 454 U.S. 235, 256 (1981). Under the doctrine, a court
may relinquish its jurisdiction through dismissal of a case, so that the case
may be adjudicated elsewhere. DTEX, 508 F.3d at 793. To determine whether
to dismiss a case under forum non conveniens, a district court first assesses
whether there is an adequate and available alternative forum. Gonzalez v.
Chrysler Corp., 301 F.3d 377, 379–80 (5th Cir. 2002). Then the court conducts
a balancing test based on “private-interest” and “public-interest” factors.
DTEX, 508 F.3d at 794. The defendant bears the burden of showing that those
factors weigh in favor of dismissal. Id. When assessing a forum-selection
clause in a forum non conveniens case, we review de novo the district court’s
interpretation of the forum-selection clause and the court’s determination as
to the clause’s enforceability. Weber v. PACT XPP Techs., AG, 811 F.3d 758,
768 (5th Cir. 2016). We review the district court’s weighing of the private- and
public-interest factors for a clear abuse of discretion. Id.
Ordinarily, “unless the balance is strongly in favor of the defendant, the
plaintiff’s choice of forum should rarely be disturbed.” Gulf Oil Corp. v. Gilbert,
330 U.S. 501, 508 (1947). A valid forum-selection clause changes this dynamic.
The private-interest factors are deemed to “weigh entirely in favor of the
preselected forum,” and “the plaintiff’s choice of forum merits no weight.”
Barnett v. DynCorp Int’l, L.L.C., 831 F.3d 296, 300 (5th Cir. 2016). As a result,
“in all but the most unusual cases,” the “forum-selection clause controls the
forum non conveniens inquiry.” Id. (alteration omitted).
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Here, the district court concluded that the agreement incorporated by
reference the 2016 addendum and its forum-selection clause. The district court
then analyzed the relevant factors and concluded they weighed in favor of
dismissal and enforcing the forum-selection clause. We examine both
conclusions.
Under Texas law, a contract may incorporate an unsigned document by
reference “provided the document signed by the defendant plainly refers to
another writing.” Owen v. Hendricks, 433 S.W.2d 164, 166 (Tex. 1968). The
specific language used is not important. Id. Even so, “[p]lainly referring to a
document requires more than merely mentioning the document. The language
in the signed document must show the parties intended for the other document
to become part of the agreement.” Bob Montgomery Chevrolet, Inc. v. Dent Zone
Cos., 409 S.W.3d 181, 189 (Tex. App.—Dallas 2013, no pet.) (citation omitted).
That court held that the fact a contract mentioned additional details were
“available for your review” on a website was insufficient to cause the
incorporation of the external document, specifically, the forum-selection clause
on a webpage. Id. at 190. On the other hand, there was sufficient reference
for incorporation of a jury-waiver clause in a lease when, in a guaranty
document for the lease, the guarantor promised to “‘faithfully perform and
fulfill all of the terms, covenants, conditions, provisions, and agreements’ of the
lease.” In re Prudential Ins. Co. of Am., 148 S.W.3d 124, 135 (Tex. 2004).
After determining a document is incorporated by reference, a court must
ensure that the document the party relies on for incorporation is in fact the
document mentioned in the contract. See IBM Corp. v. Lufkin Indus., Inc., 564
S.W.3d 15, 36–37 (Tex. App.—Tyler 2017), aff’d in part, rev’d in part on other
grounds sub nom. IBM Corp. v. Lufkin Indus., LLC, 573 S.W.3d 224 (Tex.
2019). In the cited case, a contract referred to “the IBM Customer Agreement
(‘ICA’), number HQ 12291, dated January 22, 1991.” 573 S.W.3d at 228 n.3.
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IBM had proffered a document with an entirely different number, but IBM’s
witness “did not explain the differences between the two document reference
numbers.” 564 S.W.3d at 37. That intermediate appeals court concluded the
trial court acted within its discretion in refusing to admit the document into
evidence. Id. The Texas Supreme Court, though partially reversing, agreed
the contract “incorporate[ed] a document” but the relevant document “was
never entered into evidence.” 573 S.W.3d at 228 n.3 (Tex. 2019).
In this case, Sierra concedes that some document was incorporated into
the contract. Indeed, by making the agreement “subject to” the “Standard
Terms and Conditions of Sale” that were available on request, the contract
explicitly refers to another document. The question for us is whether the
document titled “CDE General Conditions – June 2016” is the incorporated
document. To this question, only the defendant presented evidence.
The evidence indicates that, before this lawsuit commenced, CDE was
already identifying the 2016 addendum as the one mentioned in the contract.
CDE sent Sierra the 2016 addendum as an attachment to a letter about the
project’s timeline. CDE’s financial director attested that the 2016 addendum
was the document referred to in the order acknowledgement. CDE also
explained that the addendum was dated 2016, even though the contract was
executed in 2017, because when the agreement was signed, the 2016
addendum was the most current version of CDE’s terms and conditions.
Moreover, as the district court found, the 2016 addendum contained the kind
of terms and conditions one would expect to accompany the parties’ agreement.
We therefore agree that the acknowledgement of Sierra’s order incorporated
the 2016 addendum.
The result is the same even if Sierra never read the forum-selection
clause. “[S]imply being unaware of a forum-selection clause does not make it
invalid.” In re Int’l Profit Assocs., Inc., 286 S.W.3d 921, 924 (Tex. 2009). “A
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party who signs an agreement is presumed to know its contents. That includes
documents specifically incorporated by reference.” In re Lyon Fin. Servs., Inc.,
257 S.W.3d 228, 232 (Tex. 2008) (citation omitted). Sierra was on notice that
a document containing CDE’s terms and conditions existed. See Int’l Profit
Assocs., 286 S.W.3d at 923. Sierra’s failure to request a copy of that document
was at its own risk.
Because the forum-selection clause was incorporated into the contract
and is binding, all the forum non conveniens private-interest factors weigh in
CDE’s favor of litigating the case in Northern Ireland. See Barnett, 831 F.3d
at 300. There are no unusual circumstances that warrant retaining the
litigation in Texas. See id. at 301.
Sierra has not shown that the district court abused its discretion in
determining the convenience factors weighed in favor of litigating this case in
Northern Ireland.
AFFIRMED.
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