Yavuz v. 66 Mm, Ltd.

• Decision Date: 20 September 2006
• Docket Number: No. 04-5152.,No. 04-5188.,No. 05-5155.,04-5152.,04-5188.,05-5155.
• Parties: Orhan YAVUZ, Plaintiff-Appellant, v. 61 MM, LTD, an Oklahoma limited partnership; 61 MM Corp., an Oklahoma corporation; Adi Kamel Mohamed, also known as Kamal Adi; FPM S.A., a corporation, doing business as FPM Finastate Projects Management S.A., a Swiss corporation, Defendants-Appellees, Orhan Yavuz, Plaintiff-Appellant, v. 61 MM, Ltd., an Oklahoma limited partnership; 61 MM Corp., an Oklahoma corporation; Adi Kamel Mohamed, also known as Kamal Adi; FPM S.A., doing business as FPM Finastate Projects Management S.A., a Swiss corporation, Defendants-Appellees.
• Court: U.S. Court of Appeals — Tenth Circuit

Page 418

465 F.3d 418

Orhan YAVUZ, Plaintiff-Appellant, v. 61 MM, LTD, an Oklahoma limited partnership; 61 MM Corp., an Oklahoma corporation; Adi Kamel Mohamed, also known as Kamal Adi; FPM S.A., a corporation, doing business as FPM Finastate Projects Management S.A., a Swiss corporation, Defendants-Appellees, Orhan Yavuz, Plaintiff-Appellant, v. 61 MM, Ltd., an Oklahoma limited partnership; 61 MM Corp., an Oklahoma corporation; Adi Kamel Mohamed, also known as Kamal Adi; FPM S.A., doing business as FPM Finastate Projects Management S.A., a Swiss corporation, Defendants-Appellees.

No. 04-5152.

No. 04-5188.

No. 05-5155.

United States Court of Appeals, Tenth Circuit.

September 20, 2006.

COPYRIGHT MATERIAL OMITTED

Kenneth Michael Smith, (Robert P. Skeith, with him on the brief), Riggs, Abney, Neal, Turpen, Orbison & Lewis, Tulsa, OK, for Plaintiff-Appellant.

Timothy A. Carney, (James M. Sturdivant, Cason P. Carter, with him on the brief), Gable & Gotwals, Tulsa, OK, for Defendants-Appellees, Kamal Adi and FPM, S.A.

Grant E. Cheadle, Cheadle & Associates, Inc., Tulsa, OK, for Defendants-Appellees, 61 MM Corp. and 61 MM Ltd.

Before HARTZ, McKAY, and TYMKOVICH, Circuit Judges.

HARTZ, Circuit Judge.

Orhan Yavuz, a Turkish citizen, has been involved in various international business transactions with Kamal Adi, a dual Syrian and Swiss citizen, since the early 1980s. Frustrated with the treatment of what he considers an investment in certain real property in Tulsa, Oklahoma (the Tulsa Property), Mr. Yavuz has brought suit against Mr. Adi and others, seeking relief under the federal Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. § 1964(c), and a variety of other causes of action based on allegations of misrepresentations and breach of contract. Title to the Tulsa Property is held by a limited partnership, 61 MM, Ltd., whose general partner is 61 MM Corp., an Oklahoma corporation. The partnership and the corporation are both parties to this dispute and will be referred to collectively as the 61 MM Defendants. The remaining defendant who is a party to this appeal is FPM S.A. d/b/a Finastate Projects Management S.A. (FPM), a Swiss corporation whose principal place of business is Fribourg, Switzerland. Two other defendants, Euroeast Corp. and Sigofine S.A., both of which are Panamanian corporations, have not been served.

The district court dismissed the suit for improper venue on the basis of a forum-selection clause in a 1989 written agreement (the Fiduciary Agreement) between Mr. Yavuz and Finastate SA. (FSM is the successor in interest to Finastate SA, and the latter will be referred to as FSM in this opinion.) On appeal Mr. Yavuz argues that the district court erred by (1) dismissing the case under the forum-selection clause; (2) dismissing the case under the doctrine of forum non conveniens (to the extent that the court relied on that doctrine); and (3) dismissing the case against the 61 MM Defendants, who were not parties to the Fiduciary Agreement and who forfeited any objection to venue by not timely raising it. He also contends that the district court erred in ordering him to execute documents to remove any cloud on the title to the Tulsa Property.

We have jurisdiction under 28 U.S.C. § 1291. We hold that when an international commercial agreement has both choice-of-law and forum-selection provisions, the forum-selection provision must ordinarily be interpreted under the law chosen by the parties. We reverse and remand for further proceedings regarding the meaning under Swiss law of the forum-selection clause and whether dismissal is appropriate under the doctrine of forum non conveniens. We need not address Mr. Yavuz's arguments directed specifically at the dismissal of the 61 MM Defendants. Also, we vacate the order requiring Mr. Yavuz to execute documents.

I. FACTS AND PROCEDURAL BACKGROUND

A. State-Court Proceedings

Mr. Yavuz filed suit in the District Court of Tulsa County, Oklahoma, on June 18, 2002, against Lee James A. Bentley, an individual whom he believed to control the Tulsa Property. On September 27, 2002, he filed an amended petition adding the 61 MM Defendants, and dropping Bentley. The 61 MM Defendants filed an answer, asserted a counterclaim against Mr. Yavuz, and moved for summary judgment. The state court denied the summary-judgment motion on February 10, 2003. Meanwhile, FPM had filed suit in Switzerland against Mr. Yavuz on December 24, 2002, to enforce his alleged promise to invest further funds in the Tulsa Property.

On July 28, 2003, Mr. Yavuz filed a Second Amended and Restated Petition (Second Amended Petition), adding Mr. Adi, FPM, Euroeast Corp., and Sigofine S.A. as defendants. The Second Amended Petition alleged the following course of conduct:

Mr. Yavuz first gave "gold, silver and foreign currencies" to Mr. Adi and Euroeast in "the early 1980's," Aplt.App. at 58, for "various investment purposes," including an interest in the Tulsa Property, id. at 59. According to the terms of the parties' investment agreement, outlined in a letter dated February 11, 1981, Mr. Yavuz was to have a 20% ownership share in the Tulsa Property.

At some unspecified point in the 1980s, Mr. Yavuz discovered that the defendants "had misappropriated much of the gold and silver" that he had placed with them. Id. at 59. He confronted Mr. Adi in 1989 about the missing commodities, and Mr. Adi offered to settle the dispute by compensating Mr. Yavuz in the form of a loan in addition to the 20% interest in the Tulsa Property. The amount of the loan, about $735,000, was the value of the gold and silver that Mr. Adi had "misappropriated," plus accumulated interest. Id. This new agreement was memorialized in the December 31, 1989, Fiduciary Agreement between Mr. Yavuz and FPM (which was controlled and directed by Mr. Adi). The full text appears in the Appendix to this opinion.

The Fiduciary Agreement describes Mr. Yavuz's investment as two assets held in trust by FPM:

— an investment of 20 % in the share capital of Madonna BV [the predecessor of 61 MM Corp.], Curaçao at a market value of US$ 201'420. — at December 31, 1989.

— a loan of US$ 401'880. — granted to Madonna BV, Curaçao with additional accrued interest of US$ 333'238.46 at December 31, 1989.

Id. at 131. Article 2 of the Fiduciary Agreement states:

[Yavuz] undertakes to give all the documents, information and technical assistance, that are necessary for [FPM] to perform its mandate.

In particular it is agreed that [Yavuz] will release [FPM] from all obligations which have been contracted as fulfilment of the mandate according to article 1 hereinabove.

Id. Article 10 contains the following choice-of-law and forum-selection provisions:

This convention is governed by the Swiss law, in particular article 394 and following of the Swiss Code of Obligation. Place of courts is Fribourg.

Id. at 133.

"Over the next several years," Mr. Yavuz received "very sporadic and sketchy reports" regarding his investment in the Tulsa property. Id. at 60. In May 1999, nearly 10 years after execution of the Fiduciary Agreement, Mr. Yavuz inquired about the status of the investment "due to the lack of transparency in reporting to him." Id. At some unspecified time after this inquiry, Mr. Adi and FPM began "corresponding via facsimile" with representatives of 61 MM Corp. and 61 MM Ltd., for the purpose of devising a "strategy" to provide him with "misleading financial information." Id. Part of this strategy was to send on behalf of 61 MM Corp. a letter to Mr. Yavuz on FPM letterhead containing unspecified "false and misleading information" to convince Mr. Yavuz that he would need to pay several hundred thousand dollars "to vest his interest in the Tulsa property." Id.

Communications between Mr. Yavuz and the defendants about the property continued, culminating in a letter dated November 27, 2000, from FPM to Mr. Yavuz. This letter "contained false and misleading accounting data" that Mr. Adi and FPM had prepared with the cooperation of the 61 MM Corp., id. at 61, and demanded that Mr. Yavuz transfer $874,703 to a bank in Fribourg, Switzerland, to vest his interest in the Tulsa Property.

Also during this time, the defendants defrauded and misled Mr. Yavuz by "structuring" the finances of 61 MM Corp. (by "creating layers of affiliate corporations and entities," id.) so that his 20% equity interest in 61 MM Corp. and his $735,000 loan "are essentially worthless," id. Finally, the defendants have been selling portions of the Tulsa Property since 1997, receiving over $800,000 from sales without sharing any profits with him.

The Second Amended Petition asserted 10 claims based on the foregoing allegations:

(1) Constructive Trust — The defendants' "denial that [Mr. Yavuz] has an interest in the property," and their "structuring the corporate ownership of the property in such a fashion as to deprive him of any value in his investment in the corporate general partner," has put them "in a position of ownership of the Tulsa property which they ought not to, in equity and in good conscience, hold and enjoy," entitling him to a constructive trust on the Tulsa Property. Id. at 63.

(2) Restitution — The defendants were unjustly enriched by having "the use of [Mr. Yavuz's] invested funds for over twenty years . . . without properly recognizing [his] investment in the remaining Tulsa property," entitling him to restitution of $935,000 plus interest from December 31, 1989. Id. at 63-64.

(3) Common Law Fraud — The defendants' communications to Mr. Yavuz, "culminat[ing] in the [letter from FPM] of November 27, 2000," constituted common-law fraud entitling him to compensatory damages of $935,000 and punitive damages of at least $10,000. Id. at 64.

(4) Constructive Fraud — Even if "the statements made to [Mr. Yavuz] by the Defendants . . . [were] made without an actual fraudulent intent," they still "gained an advantage to the foregoing Defendan...