3:24-cv-01440
D.P.R.Mar 11, 2025Background
- R5 Partners, Inc. sued Renatus Advisors, LLC and Eric Swider in the U.S. District Court for the District of Puerto Rico for breach of a Promissory Note and a related Unlimited Personal Guaranty Agreement.
- The Promissory Note included a clause designating the “exclusive jurisdiction of the courts of the Commonwealth of Puerto Rico located in the Municipality of San Juan” for all disputes arising from it.
- The Guaranty Agreement, signed by Swider, contained a nonexclusive forum selection clause allowing disputes to be resolved in either local courts of Puerto Rico or federal court, at the lender’s option.
- Plaintiff argued that the Guaranty Agreement’s forum clause governed or superseded the Promissory Note’s clause, or alternatively that the Promissory Note’s clause permitted suit in federal court.
- Defendants moved to dismiss, arguing the claims as to Renatus must be brought only in the Puerto Rico local courts, consistent with the exclusive forum chosen in the Promissory Note.
- The Court analyzed enforceability and scope of both forum selection clauses, ultimately finding the Promissory Note’s clause mandatory and applicable to claims against Renatus.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the forum selection clause in the Promissory Note is mandatory | Clause is permissive or allows federal court in San Juan | Clause is mandatory; only Puerto Rico local courts allowed | Clause is mandatory, local Puerto Rico courts only |
| Scope of the clause—does it cover these claims | Claims not solely in connection with the Note | Dispute arises in connection with the Note | Clause covers these claims |
| Whether Guaranty Agreement’s forum clause governs | Its clause is broader/supersedes the Note | Renatus isn't a party to Guaranty; it can't supersede Note | Guaranty clause not binding as to Renatus |
| Reasonableness/enforceability of forum clause | (No strong argument raised on unreasonableness) | Clause is prima facie valid and enforceable | Clause is enforceable; no reason to set aside |
Key Cases Cited
- Rivera v. Kress Stores of Puerto Rico, Inc., 30 F.4th 98 (1st Cir. 2022) (sets out the three-step inquiry for forum selection clauses)
- Claudio-De Leon v. Sistema Universitario Ana G. Mendez, 775 F.3d 41 (1st Cir. 2014) (provides the framework for interpreting, applying, and invalidating forum selection clauses)
- Carter’s of New Bedford, Inc. v. Nike, Inc., 790 F.3d 289 (1st Cir. 2015) (interprets broad forum selection clause language)
- Huffington v. T.C. Grp., LLC, 637 F.3d 18 (1st Cir. 2011) (addresses the breadth and meaning of "in connection with" in forum clauses)
- Commonwealth of Puerto Rico v. Sanchez Valle, 579 U.S. 59 (2016) (clarifies Puerto Rico’s legal status as a distinct political entity)
- M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1 (1972) (establishes the strong presumption of validity for forum selection clauses)