Carlyle Investment Management v. Moonmouth Company SA
2015 U.S. App. LEXIS 2808
| 3rd Cir. | 2015Background
- Carlyle Investment Management and related entities/individuals sued defendants (Plaza and affiliates) in Delaware Chancery to enforce a Delaware forum-selection clause in a 2006 Subscription Agreement and to enforce releases in later Bundora Transfer Agreements.
- Moonmouth (a signatory) purchased CCC shares under the 2006 Subscription Agreement; Plaza signed on Moonmouth’s behalf as its director; the Subscription Agreement specified Delaware courts have exclusive jurisdiction and Delaware law governs.
- CCC went into liquidation in Guernsey; Guernsey liquidators later sued Carlyle. Defendants’ counsel sent letters threatening claims against Carlyle and its affiliates. Plaintiffs sought declaratory relief and to enforce releases.
- Plaintiffs served defendants; Plaza removed the Chancery action to federal court. Plaintiffs moved to remand; the District Court remanded based on the Subscription Agreement forum clause. Plaza appealed.
- The Third Circuit reviewed whether it had jurisdiction to hear the appeal (remand based on forum clause falls outside §1447(c) bar), and whether (a) Plaza—though a non-signatory—was bound by the Subscription Agreement forum clause, (b) plaintiffs could invoke it, and (c) an alternative Transfer Agreement forum clause (CEP III) independently barred removal.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the court of appeals has jurisdiction to review remand order | Remand was based on forum-selection clause (not §1447(c)), so appealable | Remand divested federal court jurisdiction once mailed | Court had jurisdiction because remand was based on forum clause exception to §1447(d) bar on review |
| Whether Plaza (non-signatory) is bound by Subscription Agreement forum clause | Plaintiffs: Plaza is closely related to Moonmouth (director, executed agreement, shared control/benefit) so clause binds Plaza; plaintiffs (affiliates) can enforce it | Plaza: not a signatory; contends clause inapplicable and plaintiffs lack standing to invoke it | Court: Plaza is closely related and foreseeable party; plaintiffs are closely related to CCC and can enforce clause; claims arise "with respect to" the Subscription Agreement; clause enforceable |
| Whether the CEP III Transfer Agreement forum clause independently bars removal | Plaintiffs: CEP III clause covers affiliates and disputes "relating in any way" to agreement and lists Delaware state court (not D. Del. federal) among venues, so Count I was not removable | Plaza: removal was proper | Court: CEP III clause plainly forbids removal to Delaware federal court; Count I could not have been brought in federal court, so removal improper; alternative ground for remand affirmed |
| Whether plaintiffs are judicially estopped or waived forum enforcement by asserting releases | Plaintiffs: releases affected only pre-existing claims; forum clause survives and plaintiffs consistently pleaded it | Plaza: plaintiffs’ allegations concede releases barred the Subscription Agreement or otherwise are inconsistent, so estoppel/waiver apply | Court: No inconsistency shown; releases did not terminate the Subscription Agreement or its forum clause; judicial estoppel and waiver arguments fail |
Key Cases Cited
- M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1 (1972) (forum-selection clauses generally enforceable unless unreasonable or invalid)
- New Hampshire v. Maine, 532 U.S. 742 (2001) (elements and purpose of judicial estoppel)
- Ingres Corp. v. CA, Inc., 8 A.3d 1143 (Del. 2010) (forum-selection clauses presumptively valid under Delaware law)
- Ashall Homes Ltd. v. ROK Entm’t Grp. Inc., 992 A.2d 1239 (Del. Ch. 2010) (non-signatory may enforce forum clause if closely related to signatory)
- Huffington v. T.C. Group, LLC, 637 F.3d 18 (1st Cir. 2011) (forum clause applies to claims that grow out of contractual relationship even if plaintiff pleads non-contract claims)