Carlyle Investment Management, L.L.C. v. Carlyle Capital Corp.
2011 U.S. Dist. LEXIS 85710
| D. Del. | 2011Background
- Carlyle CIM, TC Group, and TCGH filed suit in Delaware Court of Chancery seeking an anti-suit injunction to enforce the forum selection clause in the IMA and to restrain the liquidators from pursuing parallel actions elsewhere.
- CCC is a Guernsey private company in liquidation; the IMA governs CIM's management of CCC and includes a Delaware forum selection clause.
- Liquidators removed the second Chancery action to federal court and sought dismissal or stay; plaintiffs moved for remand and for preliminary injunctive relief.
- The liquidators previously filed a first Chancery action and intended to litigate in Delaware, with later dismissal in Chancery and continuation in Guernsey; related actions in D.C., Guernsey, and New York were ongoing or stayed.
- The court applied a strict removal standard and presumption in favor of enforcing the forum clause, concluding the clause is presumptively valid and enforceable absent strong showing of unreasonableness.
- The court found the liquidators waived objections to the Delaware forum, and that enforcement of the IMA’s forum clause was appropriate, resulting in remand to the Court of Chancery.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether removal was proper despite the forum clause | CIM argued removal was improper; forum clause compelled Delaware forum and undermined removal. | Liquidators argued removal was permissible, having complied with jurisdictional requirements and that the clause could be waived or overcome. | Remand granted; removal improper due to enforceable forum clause. |
| Whether the liquidators waived rights to object to Delaware forum | Waiver language and conduct showed plaintiffs chose Delaware and abandoned other forums. | Waiver did not apply; objections could still be raised. | Liquidators waived their right to object to the Delaware forum. |
| Whether the IMA forum clause is enforceable and exclusive | Clause is valid and requires Delaware courts; protections under Bremen and related authority apply to enforceability. | Clause is unenforceable due to overreach or unreasonableness, or lack of arms-length negotiation. | Clause enforceable and Delaware is the appropriate forum. |
Key Cases Cited
- M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1 (U.S. 1972) (forum selection clause generally enforceable absent strong showing of unreasonableness or overreaching)
- Foster v. Chesapeake Ins. Co., Ltd., 933 F.2d 1207 (3d Cir. 1991) (forum selection clauses are presumptively valid and enforceable)
- QVC Inc. v. Your Vitamins, Inc., 753 F. Supp. 2d 428 (D. Del. 2010) (forum selection clause presumptively valid; three-part test for overcoming)
- Hays & Co. v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 885 F.2d 1149 (3d Cir. 1989) (trustee bound by debtor’s contract terms; implications for liquidators enforcing rights)
- Abels v. State Farm Fire & Casualty Co., 770 F.2d 26 (3d Cir. 1985) (removal standards and forum considerations in third-party actions)