Howell v. Covalent Chemical, LLC ( 2021 )

THE STATE OF SOUTH CAROLINA
In The Court of Appeals
Glenn P. Howell, Appellant,
v.
Covalent Chemical, LLC, and Matthew W. Rowe,
Respondents.
Appellate Case No. 2018-001885
Appeal From Greenville County
Letitia H. Verdin, Circuit Court Judge
Opinion No. 5869
Heard May 3, 2021 – Filed November 3, 2021
REVERSED AND REMANDED
David Eliot Rothstein, of Rothstein Law Firm, PA, of
Greenville, for Appellant.
Joseph Owen Smith, of Smith Hudson Law, LLC, of
Greenville, for Respondents.
GEATHERS, J.: In this action under the South Carolina Payment of Wages Act,1
Appellant Glenn P. Howell (Employee) seeks review of the circuit court's order
dismissing the action for improper venue. Employee argues the circuit court erred
by (1) misinterpreting the forum selection clause in the parties' employment
agreement; (2) failing to apply section 15-7-120(A) of the South Carolina Code
1
S.C. Code Ann. §§ 41-10-10 to -110 (2021).
(2005) to override the forum selection clause;2 (3) applying the agreement's choice
of law provision when it violated the policies expressed in section 15-7-120(A) and
the Payment of Wages Act; and (4) failing to consider forum non conveniens. We
reverse and remand.
FACTS/PROCEDURAL HISTORY
On June 4, 2015, Respondent Matthew W. Rowe formed Respondent
Covalent Chemical, LLC (Employer), a chemical distribution company, in North
Carolina, and he established the company's headquarters in Raleigh, North Carolina.
The company was originally incorporated in Texas. In the summer of 2015, Rowe,
who had previously worked with Employee at another chemical distribution
company, began recruiting Employee to work for Employer as a sales representative.
Rowe met with Employee on two separate occasions in Greenville, South Carolina,
where Employee lived.
On or about September 24, 2015, Rowe sent a proposed employment
agreement to Employee's personal email account. Employee responded with
proposed changes and "questions or comments typed in red." In response to some
of Employee's comments and questions, Rowe revised the contract and sent the
revised version to Employee on September 30, 2015. Later that same day, Employee
signed the contract in Greenville, scanned it, and emailed it to Rowe, who then
signed the contract and emailed it back to Employee.
Notably, the contract stated that it was "made . . . at Houston, Texas" and
identified Employer as a Texas limited liability company. The contract provided
Employee would receive a base salary of $61,000 per year and thirty percent
commissions from each sale. The section titled, "Governing Law," set forth the
following language:
2
Section 15-7-120(A) states,
Notwithstanding a provision in a contract requiring a
cause of action arising under it to be brought in a location
other than as provided in this title and the South Carolina
Rules of Civil Procedure for a similar cause of action, the
cause of action alternatively may be brought in the manner
provided in this title and the South Carolina Rules of Civil
Procedure for such causes of action.
THE INTERPRETATION OF THIS AGREEMENT
SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LOCAL, INTERNAL
LAWS OF THE STATE OF TEXAS, UNITED STATES
OF AMERICA. THE PARTIES AGREE TO THE
JURISDICTION OF THE STATE AND FEDERAL
COURTS LOCATED IN HARRIS COUNTY, TEXAS,
AND WAIVE ANY RIGHT AVAILABLE TO A TRIAL
BY JURY.
Employee began working for Employer on or about October 15, 2015.
Employee's compensation changed "shortly after [he] began his employment with"
Employer. The new salary was $64,000, and the new commission percentage was
twenty percent. During his first year of employment with the company, Employee's
sales territory covered Georgia. Subsequently, South Carolina was his primary sales
territory. His sales territory never included Texas, and other than attendance at a
trade show in Dallas, which was required as part of his training, Employee never
traveled to Texas during his employment with the company.
On May 9, 2018, Employee filed this action seeking relief under the Payment
of Wages Act and asserting additional causes of action for breach of contract and an
equitable accounting. Employee alleged, inter alia, that Employer failed to pay (1)
approximately $57,180 owed to Employee for earned commissions; (2) certain
expenses, including a $500 per month vehicle allowance; and (3) certain promised
benefits. One month later, Employee filed an amended complaint to correct a
scrivener's error. Employer subsequently filed a motion to dismiss this action
pursuant to Rule 12(b)(3), SCRCP, which allows the defense of improper venue to
be made by motion.3
The circuit court granted the motion to dismiss in a Form 4 Order filed on
October 16, 2018. The order stated, "The Motion to Dismiss filed by Defendants
Covalent Chemical LLC and Matthew W. Rowe is hereby granted[,] and the action
is dismissed due to South Carolina being the improper venue." The circuit court
later denied Employee's Rule 59(e), SCRCP, motion. This appeal followed.
3
Employer later filed an amended motion to dismiss to add an alternative request to
compel arbitration, which the circuit court did not address. The arbitration provision
in the parties' contract states that disputes "can" be submitted to alternative dispute
resolution.
LAW/ANALYSIS
I. Choice of Law Provision
Employee argues the employment agreement's choice of law provision
violates the South Carolina policies expressed in section 15-7-120(A) and the
Payment of Wages Act, specifically, section 41-10-100.4 On the other hand,
Employer asserts the circuit court's order did not rely on the choice of law provision
and, therefore, Employee's challenge of that provision is moot. However, Employee
points to the circuit court's language in two previous orders that were later rescinded
and asserts the circuit court's act of rescinding the previous orders was merely
housekeeping that "did not negate the court's express, underlying rationale that the
employment agreement in question 'should be governed by the law of Texas.'"5
Unlike the rescinded orders, the circuit court's October 16, 2018 order
dismissing this action does not indicate whether the circuit court relied on the choice
of law provision. Because we do not know whether the circuit court considered the
choice of law provision, we decline to hold that Employee's choice of law argument
is moot. See Sloan v. Friends of Hunley, Inc., 369 S.C. 20, 26, 630 S.E.2d 474, 477
(2006) ("A moot case exists where a judgment rendered by the court will have no
practical legal effect upon an existing controversy because an intervening event
renders any grant of effectual relief impossible for the reviewing court."); id. ("If
there is no actual controversy, this [c]ourt will not decide moot or academic
questions."). Therefore, we address its merits.
"Generally, under South Carolina choice of law principles, if the parties to a
contract specify the law under which the contract shall be governed, the court will
honor this choice of law." Skywaves I Corp. v. Branch Banking & Tr. Co., 423 S.C.
432, 448–49, 814 S.E.2d 643, 652 (Ct. App. 2018) (quoting Nucor Corp. v. Bell, 482
4
Section 41-10-100 prohibits private contracts from attempting to set aside the
provisions of the Payment of Wages Act.
5
After the circuit court issued the order on appeal, it rescinded two previously issued
orders dismissing this action because they contained scrivener's errors. The first
rescinded order stated, "[Employer's] Motion to dismiss is hereby denied based upon
a finding that the proper forum for the action is Texas and interpretation of the terms
and provisions of the contract should be governed by the laws of Texas." (emphasis
added). The second rescinded order was identical to the first, with the exceptions
that "denied" was changed to "granted" and the order mistakenly indicated that it did
"not end the case."
F. Supp. 2d 714, 728 (D.S.C. 2007)). "However, a choice-of-law clause in a contract
will not be enforced if application of foreign law results in a violation of South
Carolina public policy." Id. at 449, 814 S.E.2d at 652 (quoting Nucor, 482 F. Supp.
2d at 728); see also Simpson v. MSA of Myrtle Beach, Inc., 373 S.C. 14, 33, 644
S.E.2d 663, 673 (2007) ("This [c]ourt will not enforce a contract which is violative
of public policy, statutory law, or provisions of the Constitution."); Boone v. Boone,
345 S.C. 8, 14, 546 S.E.2d 191, 193 (2001) ("[U]nder the 'public policy exception,'
the [c]ourt will not apply foreign law if it violates the public policy of South
Carolina."). Nonetheless, differences between two states' laws "does not necessarily
imply that the law of one state violates the public policy of the other." Id. (quoting
Nash v. Tindall Corp., 375 S.C. 36, 41, 650 S.E.2d 81, 84 (Ct. App. 2007)).
Here, the parties' choice of Texas law is limited to contract interpretation:
"INTERPRETATION OF THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LOCAL, INTERNAL LAWS OF
THE STATE OF TEXAS, UNITED STATES OF AMERICA." (emphasis added).
The concerns Employee expresses in his brief are based on the assumption that the
choice of law provision allows Texas law to subsume the whole employment
relationship (so as to preempt the South Carolina Payment of Wages Act) or the
entirety of this action (so as to preempt section 15-7-120). We disagree with this
assumption because the plain language of the choice of law provision requires the
application of Texas law to contract interpretation only. Further, as we explain
below, the application of Texas law to the interpretation of the forum selection clause
in the instant matter does not vest Texas with exclusive jurisdiction.
II. Forum Selection
Employee also argues the plain language of the forum selection provision does
not require the parties to litigate their contractual disputes exclusively in Texas
because the provision has no mandatory language. We agree.
Under Texas law, "[t]he primary goal in construing the meaning of a contract
is to ascertain and give effect to the parties' intent as expressed in the contract."
Ramsay v. Tex. Trading Co., 254 S.W.3d 620, 630 (Tex. App. 2008). The court
construes the contract "according to its plain language." Id. at 626. "If the written
instrument is so worded that it can be given a certain or definite legal meaning or
interpretation, then it is not ambiguous and the court will construe the contract as a
matter of law." Id. at 630 (quoting Coker v. Coker, 650 S.W.2d 391, 393 (Tex.
1983))).
Further, unless a forum selection clause expressly provides for a forum's
exclusive jurisdiction, the parties did not intend to submit to exclusive jurisdiction
in that forum. See Ramsay, 254 S.W.3d at 629–30; Mabon Ltd. v. Afri-Carib Enters.,
Inc., 29 S.W.3d 291 (Tex. App. 2000), abrogated on other grounds by In re AIU Ins.
Co., 148 S.W.3d 109, 111–14 (Tex. 2004); Sw. Intelecom, Inc. v. Hotel Networks
Corp., 997 S.W.2d 322 (Tex. App. 1999), abrogated on other grounds by In re AIU
Ins. Co., 148 S.W.3d at 111–14. In Mabon, the meaning of the following clause was
disputed: "It is also agreed between the parties [that] because of the multi-state and
multi-country jurisdiction involved due to the locations of the principals, banks and
depositories, etc., the laws of . . . Nigeria will apply and the Federal District of
Nigeria shall have venue." 29 S.W.3d at 297. Comparing this clause to forum
selection clauses in federal cases, the Texas Court of Appeals concluded that its
language did not exclude other forums and that in the absence of explicit language
providing for exclusive jurisdiction in Nigeria, the parties did not intend to submit
to exclusive jurisdiction in Nigeria. 29 S.W.3d at 297–98.
In Southwest Intelecom, the Texas Court of Appeals reviewed the following
clause: "This Agreement shall be governed by the laws of the State of Minnesota.
The Parties stipulate to jurisdiction and venue in Ramsey County, Minnesota, as if
this Agreement were executed in Minnesota." 997 S.W.2d at 323. The court
concluded that this language "merely settles any question of whether the courts of
that state have jurisdiction" and did not "provide Minnesota courts with exclusive
jurisdiction to hear all disputes arising from the agreements." Id. at 326.6
6
In response to the trial court's statement that the provision "would be meaningless
if it were construed to mean that either party could elect to assert jurisdiction in any
other state," the court noted:
Interpreting the provision to mean that both parties agree
to jurisdiction and venue in Minnesota (but not
exclusively) enables [the defendant] to sue [the plaintiff]
in [the defendant's] headquarters state without worrying
about jurisdictional issues. Without the jurisdiction
clause, it is at least arguable that a Minnesota court would
have been unable to exercise jurisdiction over [the
plaintiff], since [the plaintiff] has apparently had little, if
any, contact with that state.
Southwest Intelecom, 997 S.W.2d at 326.
As in Southwest Intelecom and Mabon, the plain language in the parties' forum
selection clause in the instant matter shows they intended for the clause to be
permissive rather than mandatory because the language does not expressly provide
for Texas to have exclusive jurisdiction: "THE PARTIES AGREE TO THE
JURISDICTION OF THE STATE AND FEDERAL COURTS LOCATED IN
HARRIS COUNTY, TEXAS, AND WAIVE ANY RIGHT AVAILABLE TO A
TRIAL BY JURY." Moreover, "[a] permissive forum selection clause does not
justify dismissal on the grounds that the plaintiff filed suit in a forum other than the
one specified in the clause." BAE Sys. Tech. Sol. & Servs., Inc. v. Republic of
Korea's Def. Acquisition Program Admin., 884 F.3d 463, 470 (4th Cir. 2018), as
amended (Mar. 27, 2018); cf. Southwest Intelecom, 997 S.W.2d at 326 ("[T]he trial
court erred in dismissing [the plaintiff's] claims for lack of jurisdiction because the
parties had not consented to exclusive jurisdiction in another state.").
Because the plain language of the parties' forum selection clause in the instant
matter is permissive rather than mandatory under Texas law, the circuit court erred
in dismissing this action on the ground that venue is improper. Because our
resolution of this issue is dispositive, we need not address Employee's remaining
arguments. See Futch v. McAllister Towing of Georgetown, Inc., 335 S.C. 598, 613,
518 S.E.2d 591, 598 (1999) (providing that an appellate court need not address
remaining issues when resolution of a prior issue is dispositive).
CONCLUSION
Accordingly, the circuit court's order is
REVERSED AND REMANDED.
KONDUROS and MCDONALD, JJ., concur.