United States District Court, S.D. Texas, Houston Division
MEMORANDUM AND ORDER
KEITH P. ELLISON UNITED STATES DISTRICT JUDGE
the Court is the Motion to Remand and Request for
Attorney’s Fees (Doc. 5) filed by Plaintiff SandBox
Logistics, LLC (“SandBox” or
“Plaintiff”). Plaintiff moves the Court to remand
this action to the 334th Judicial District of Harris County,
Texas because “Arrows Up waived the right to remove
this case by agreeing to the forum selection clause in the
Settlement Agreement” in an earlier case. (Doc. 5 at
8). Plaintiff also moves the Court to require Defendants
Arrows Up, LLC, Arrows Up, Inc., and John Allegretti
(collectively “Defendants”) to pay
Plaintiff’s attorney’s fees in connection with
is a company that develops specialized containers for
transporting frac sand. (Doc. 5 at 3). Arrows Up, Inc.,
founded by John Allegretti in 2009, designs plastic
containers. (Doc. 1, Ex. C at ¶ 17). In early 2014,
SandBox retained Arrows Up, Inc. to build a plastic version
of the SandBox container. (Doc. 1, Ex. C at ¶ 24).
Arrows Up, Inc. signed a nondisclosure agreement
(“NDA”) promising not to use SandBox’s
design information without SandBox’s permission. (Doc.
5-3 at 10). By April 2014, Arrows Up, Inc. was engaging in
conduct that SandBox took to violate the NDA. (Doc. 5 at 3).
In December 2014, SandBox sued Mr. Allegretti and Arrows Up,
Inc. in the 334th Judicial District Court of Harris County,
Texas. No. 2014-70621, SandBox Logistics, LLC, et al. v.
Arrows Up, Inc., et al. (“Arrows Up
I”). Arrows Up, Inc. and Mr. Allegretti
signed a settlement agreement with SandBox in January 2015.
(Doc. 5-3 at 10). As part of the settlement, Arrows Up, Inc.
agreed to pay SandBox’s legal fees and confirmed that
Mr. Allegretti and Arrows Up, Inc. would comply with the NDA.
(Doc. 5 at 4). The settlement agreement contained the
following forum selection clause (“FSC”):
This Agreement and all claims related to it, its execution,
or the performance of the Parties under it, shall be governed
by and interpreted in accordance with the laws of the State
of Texas excepting any law or rule thereof, which would apply
the laws of any other jurisdiction. Each Party agrees that
any dispute regarding this Agreement or the matters
contemplated hereby shall be litigated only in state
courts located in Harris County, Texas, and each
Party agrees that it shall not commence any legal proceeding
relating to this Agreement or the NDA against the other party
in any other court or before any other authority. Each Party
hereby submits to the exclusive jurisdiction of the state
courts located in Harris County, Texas, and each Party,
hereby waives any objection to the jurisdiction of such
5, Ex. A at § III(L)) (emphasis added).
to SandBox, Arrows Up, Inc. continued to violate the NDA
after signing the settlement agreement. (Doc. 5 at 4). In
January 2016, SandBox filed a second lawsuit against
Defendants in the 334th Judicial District Court of Harris
County. No. 2016-03483, SandBox Logistics, LLC et al. v.
Arrows Up, Inc. et al (“Arrows Up
the same time, a company called OmniTRAX acquired a
controlling interest in Arrows Up, Inc. (Doc. No. 26, Ex. B,
Allegretti Dep. at 40:15-41:5). Ostensibly to facilitate this
transaction, OmniTRAX and Mr. Allegretti created a new entity
named Arrows Up, LLC. Id. Arrows Up, Inc. then
transferred substantially all of its assets and liabilities
to Arrows Up, LLC. Id. From that point forward,
Arrows Up, LLC operated the business, while Arrows Up, Inc.
served as a holding company for Mr. Allegretti’s
ownership interest in Arrows Up, LLC. Id. Arrows Up,
Inc., Arrows Up, LLC, and Mr. Allegretti were all named as
defendants in Arrows Up II. (Doc. 5, Ex. B at 1).
of 2017, Arrows Up, LLC filed a patent infringement suit
against SandBox in this Court. Arrows Up, LLC v. U.S.
Silica Holdings, LLC et al, 17-cv-1945. SandBox brought
counterclaims against Arrows Up, LLC for breach of the NDA
and the settlement agreement. (17-cv-1945, Doc. 38).
3, 2018, the jury in Arrows Up II found that Arrows
Up, Inc., Arrows Up, LLC, and Mr. Allegretti were liable for
breach of contract and fraud. (Doc. 5, Ex. B). The Court
awarded SandBox almost $50 million in damages, issued a
declaratory judgment that the containers sold by Defendants
after January 2015 are SandBox’s property, and ordered
Defendants to give the containers back to SandBox on a
rolling basis. (Doc. 5, Ex. B). SandBox claims, however, that
Defendants “continued to breach [their] contracts with
SandBox by marketing the SandBox-owned containers as [their]
own, even after the verdict and final judgment in Arrows
Up II.” (Doc. 5 at 6).
January 25, 2019, SandBox filed a third action in Harris
County against Defendants, seeking damages over $1 million.
No. 2019-06192, SandBox Logistics, LLC v. Arrows Up,
Inc., et al (“Arrows Up III”). On
March 1, 2019, Defendants removed the action to this Court
pursuant to 28 U.S.C. §§ 1332, 1441, and 1446.
(Doc. 1 at 1). A week later, SandBox filed its Motion to
Remand and Request for Attorney’s Fees (Doc. 5),
arguing that the mandatory FSC in the Arrows Up I
settlement agreement bars removal of the case. Defendants
responded by challenging the enforceability of the FSC. (Doc.
11). At a hearing on the Motion to Remand, Defendants argued
for the first time that the FSC does not bind Arrows Up, LLC
because Arrows Up, LLC did not yet exist at the time the
settlement agreement was signed. The Court requested
supplemental briefing on the issue. (Dkt. Entry 9/13/19).
Having reviewed the original and supplemental briefing, the
Court determines that remand is required.
a FSC is unambiguous, language vesting ‘exclusive
jurisdiction’ in a state court constitutes a waiver of
removal rights.” Grand View PV Solar Two, LLC v.
Helix Elec., Inc./Helix Elec. of Nevada, LLC., J.V., 847
F.3d 255, 259 (5th Cir. 2017). The mandatory forum selection
clause in the settlement agreement that resulted from
Arrows Up I vests “exclusive
jurisdiction” in Harris County state courts over
“any legal proceeding relating to [the settlement
agreement] or the NDA.” (Doc. 5, Ex. A at §
III(L)). This unambiguous language amounts to a
“‘clear and unequivocal’ waiver of removal
rights” over actions relating to the settlement
agreement or NDA. Id. (citing City of New
Orleans v. Mun. Admin. Servs., Inc., 376 F.3d 501, 504
(5th Cir. 2004)). Plaintiff’s claims in Arrows Up
III allege violations of the settlement agreement and
NDA. (Doc. 1, Ex. C). All defendants bound by the FSC have
therefore waived their right to removal of Arrows Up
dispute this conclusion by arguing that Plaintiff should not
be allowed to enforce the forum selection clause. Defendants
rely on the fact that, in the related patent case, Arrows
Up, LLC v. U.S. Silica Holdings, LLC et al (17-CV-1945),
Plaintiff stated in its Third Amended Complaint that
“the parties’ contracts contain choice of law,
consent to jurisdiction, and forum selection clauses making
jurisdiction and venue proper in this Court as to all
parties.” (Doc. 11, Ex. A). Defendants argue that this
statement is a judicial admission that the FSC allows
litigation in federal court or, in the alternative, that
Plaintiff should be judicially estopped from enforcing the
FSC because of the statement. (Doc. 11 at 1–2). Neither
argument is persuasive. The first argument is a nonstarter
because “judicial admissions are not conclusive and
binding in a separate case from the one in which the
admissions were made.” See Universal Am. BargeCorp. v. J-Chem, Inc. 946 F.2d 1131, 1142 (5th Cir.
1991). The second argument is unpersuasive because the Court
did not rely on Plaintiff’s statement in the patent
case. See Hall v. GE Plastics Pac. PTE
Ltd., 327 F.3d 391, 396 (5th ...