726 F.3d 1278
11th Cir.2013Background
- Xena Investments, Ltd. (Cayman Islands) sues Magnum Fund Management, Ltd. (MFM), Dion Friedland, and David Friedland for fraud, negligent misrepresentation, fraudulent inducement, breach of contract, and declaratory relief related to 2008 loans to Spectrum Galaxy Fund (MGSDF) in the British Virgin Islands.
- Xena alleges MFM, Dion, and David misrepresented that MFM loans to MGSDF were unsecured and would remain unsecured, inducing Xena to forbear on redemption rights under a 2008 Forbearance Agreement with a forum-selection clause favoring English courts.
- MFM is Bahamas-based; its principal decision maker Dion claims no Florida residence or business, and MFM conducts no Florida business; David is a Florida resident and MUS president, with a 1996 consulting agreement to provide services for MFM.
- Xena asserts it owns shares in Spectrum (BVI) and in MGSDF; it acquired its MGSDF stake in 2009 via a deed from Pentagon (BVI).
- A 2008 Forbearance Agreement includes a forum-selection clause: English courts apply English law; disputes to be heard in English courts.
- A separate Deed of Assignment (Pentagon to Xena) also contains a forum-selection clause mandating BVI courts for disputes under BVI law.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the district court properly dismissed for lack of personal jurisdiction over MFM. | Xena contends MFM has Florida contacts and is doing business in Florida. | MFM and Dion argue they are foreign entities with no Florida presence or contacts. | Affirmed: district court correctly dismissed for lack of personal jurisdiction. |
| Whether the district court properly dismissed for lack of personal jurisdiction over Dion. | Xena relies on Florida transient jurisdiction based on service while Dion was present in Florida. | Dion asserts no Florida contacts or residence; difficulties in establishing jurisdiction. | Affirmed: court upholds dismissal for lack of personal jurisdiction, with note that venue issues also support dismissal. |
| Whether forum-selection clause in the Forbearance Agreement governs the action in Florida. | Clauses do not bind Xena’s broader claims; Florida venue could be proper. | Forum-selection clause requires English courts under English law, making Florida improper. | Affirmed: forum-selection clause enforceable; Florida improper venue. |
| Whether the forum-selection clause applies to the non-signatories (Dion, David). | Non-signatories should not be bound by the clause protecting Florida forum. | Clauses extend to closely-related parties, binding them to English courts. | Affirmed: clause applies to signatories and closely-related parties, including Dion and David. |
Key Cases Cited
- Lipcon v. Underwriters at Lloyd’s, London, 148 F.3d 1285 (11th Cir. 1998) (forum-selection clause enforceability in international disputes)
- Morris v. SSE, Inc., 843 F.2d 489 (11th Cir. 1988) (evidentiary standard for jurisdictional facts; affidavits weighed)
- Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (Supreme Court 2007) (pleading standard; plausibility requirement)
- Cable/Home Commc'n Corp. v. Network Prods., Inc., 902 F.2d 829 (11th Cir. 1990) (prima facie case for personal jurisdiction standard)
- Meier ex rel. Meier v. Sun Intl. Hotels, Ltd., 288 F.3d 1264 (11th Cir. 2002) (transient jurisdiction rule; service while present binds)
- Carnival Cruise Lines, Inc. v. Shute, 499 U.S. 585 (Supreme Court 1991) (fraud- or overreach-based challenge to forum-selection clause related to enforceability)
- Bahama Sales Assoc., LLC v. Byers, 701 F.3d 1335 (11th Cir. 2012) (secondary agreements can control forum when conflicting with primary)
- Krenkel v. Kerzner Int'l Hotels Ltd., 579 F.3d 1279 (11th Cir. 2009) (heavy burden to invalidate a forum-selection clause)