87 F.3d 320 (9th Cir. 1996), 95-15118, Argueta v. Banco Mexicano, S.A.

Docket Nº:95-15118.
Citation:87 F.3d 320
Party Name:96 Daily Journal D.A.R. 7185 R.A. ARGUETA, husband; Mary Argueta, wife; Grupo Sal Corporation, Plaintiffs-Appellants, v. BANCO MEXICANO, S.A.; Francisco Suarez Davila; Alonso Cuevas del Villar, Defendants-Appellees.
Case Date:June 20, 1996
Court:United States Courts of Appeals, Court of Appeals for the Ninth Circuit

Page 320

87 F.3d 320 (9th Cir. 1996)

96 Daily Journal D.A.R. 7185

R.A. ARGUETA, husband; Mary Argueta, wife; Grupo Sal

Corporation, Plaintiffs-Appellants,


BANCO MEXICANO, S.A.; Francisco Suarez Davila; Alonso

Cuevas del Villar, Defendants-Appellees.

No. 95-15118.

United States Court of Appeals, Ninth Circuit

June 20, 1996

Argued and Submitted April 11, 1996.

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Armand Salese, Tucson, Arizona, for appellants.

William J. Mays, Houston, Texas, for appellees.

Appeal from the United States District Court for the District of Arizona, William D. Browning, District Judge, Presiding. D.C. No. CV-94-133 WDB.

Before: SNEED, NORRIS and WIGGINS, Circuit Judges.

WIGGINS, Circuit Judge:


R.A. Argueta, his wife, Mary Argueta, and Grupo Sal Corporation ("Appellants") appeal the district court's order granting appellee Banco Mexicano, S.A.'s motion to dismiss the First Amended Complaint ("FAC") pursuant to a forum selection clause requiring actions arising from the agreement between the parties to be brought in Mexico. Appellants contend that enforcement of the forum selection clause would be unreasonable because they would not receive a fair trial in Mexico. We have jurisdiction pursuant to 28 U.S.C. § 1291, and we AFFIRM.


This appeal arises from two loan agreements between R.A. Argueta ("Argueta"), a citizen of El Salvador and lawful permanent resident of the United States, and Banco Mexicano. 2 The first agreement (hereinafter "San Carlos Loan") involved property in San Carlos, Sonora. In 1980, Grupo Sal Corporation, a Cayman Islands corporation owned by Argueta and other shareholders, purchased 215 improved lots in San Carlos. Argueta arranged to redeem the shares held by the other shareholders and to promote the sales of the lots by himself. He borrowed $2,000,000 (U.S.) from Banco Mexicano on November 1, 1989, to finance the buy-out. The San Carlos Loan agreement, which was not contained in the record, provided that the $2,000,000 be disbursed in a lump sum, and that Argueta's payments on the loan be submitted to Banco Mexicano's New York City office. The agreement also included a forum selection clause, designating Mexico as the proper forum for any disputes concerning the agreement. 3

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Argueta states that, contrary to the loan agreement, the bank disbursed the amount in several installments and he had to sign promissory notes for each disbursement to be due within 60-90 days instead of six months. Although bank officials assured Argueta that the promissory notes would be renewed upon expiration to allow him six months to pay those notes, the bank did not renew the terms or respond to his inquiries about the notes.

The second loan agreement at issue, which also contained a forum selection clause designating Mexico as the proper forum for resolving disputes, 4 involves Argueta's investment in an agroindustry project (hereinafter "Papain Project"). On March 13, 1990, Papaina de Occidente, S.A. de C.V., a Mexican corporation owned in part by Argueta, borrowed $5,930,000 (U.S.) from Banco Mexicano to invest in the cultivation of papayas (hereinafter "Papaina Loan"). Argueta alleges that the bank withheld funds from the project until the corporation acceded to certain modifications of the loan agreement.

On August 16, 1990, Pedro Maldonaldo, Banco Mexicano's Regional Coordinator, requested that Argueta meet with the bank's Vice-President German Francisco Moreno at the bank's Mexico City headquarters to discuss the Papain Project and the promissory notes related to the San Carlos Loan. The meeting was scheduled for August 21, 1990. Argueta traveled from his home in Arizona to Mexico City on August 20. On the same day, Banco Mexicano filed a complaint with the Office of the Procuraduria General de la Republica ("PGR"), the Mexican Attorney General's Office, accusing Argueta and Carlos Antonio Verdugo Orozco ("Verdugo"), a former director of the bank's Guadalajara branch, of criminal fraudulent transactions.

On the day of the meeting, Moreno suggested that they conclude the meeting at the end of the week. Later at 1:00 a.m. on August 22, four PGR agents took Argueta from his hotel to a PGR office and interrogated him regarding his relationship with Verdugo. After Verdugo was brought to the office, the PGR held a press conference at 7:00 p.m. to announce that Argueta and Verdugo were responsible for fraudulent transactions. Thereafter, Argueta heard Verdugo being beaten and was told more than once that he should admit to "everything." He was then led to another room where eight Banco Mexicano employees and lawyers and PGR representatives interrogated him and reformulated his answers for the record.

Argueta was unable to contact his family or an attorney at any time and remained in a locked cell in the PGR office until August 24 or 25, at which time he was transferred to the Reclusorio Preventivo Norte prison facility. On August 25, a Banco Mexicano officer filed formal charges against Argueta, alleging that Argueta committed fraud by not giving "the bank a valid security interest in the San Carlos lots and in having misdirected loan proceeds." Argueta Aff. at 8.

During Argueta's confinement, after he refused to divest his interest in Papaina de Occidente, Banco Mexicano pressured the other shareholders to dissolve the corporation without Argueta's participation. The bank became a minority owner in Ultrapapaina S.A. de C.V., which was formed to operate the Papain Project. Banco Mexicano thereafter executed a loan agreement to finance the Papain Project and allegedly converted $500,000 (U.S.) of Ultrapapaina's funds, which led to the project's failure.

Also during his confinement, Argueta was provided an attorney who unsuccessfully tried to obtain a judicial hearing on the charges against him. After a year, he retained a new lawyer, Antonio Armendariz,

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who, Argueta knew, was acquainted with representatives of Banco Mexicano. Armendariz proposed that Argueta agree to modify the San Carlos Loan agreement--by redocumenting the bank's security interest in the lots, increasing the principal loan balance to include all interest and costs accrued to date, adjusting the interest rate, and setting the maturation of the obligation for two years--in exchange for the bank's withdrawing the charges against Argueta. After agreeing to the proposal, Argueta was released on December 24, 1991, and was authorized to leave Mexico on March 17, 1992. Argueta states that because Banco Mexicano successfully thwarted Grupo Sal Corporation's efforts to sell the San Carlos lots, he was unable to pay the San Carlos Loan when it came due. On December 8, 1993, Banco Mexicano commenced forfeiture proceedings on the San Carlos lots.

After returning to the United States, Argueta retained counsel in Mexico to investigate any remedies he might have had in Mexico with respect to the San Carlos project. The attorney withdrew from representing Argueta, however, after the head of banking at the Ministry of Finance allegedly told him that his law firm would not receive any business from Mexican banks if he continued to represent Argueta.

In 1994, Appellants commenced an action against Banco Mexicano in federal court in the District of Arizona. The FAC 5 alleges a violation of the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. §§ 1961 et seq., relating to the San Carlos Loan and common law causes of action for fraud, breach of contract/breach of the covenant of good faith and fair dealing, and tortious interference with economic expectations, relating to both the San Carlos Loan and the Papain Project. Pursuant to Federal Rules of Civil Procedure 12(b)(1)-(3), (6)-(7), Banco Mexicano moved to dismiss the action based on the forum selection clauses, lack of subject matter jurisdiction, lack of personal jurisdiction, forum non conveniens, and failure to join indispensable parties. The district court granted the motion solely based on improper venue.



We review the district court's order enforcing the contractual forum selection provision and dismissing the case for improper venue for abuse of discretion. Spradlin v. Lear Siegler Management Servs. Co., 926 F.2d 865, 867 (9th Cir.1991).


A. Federal Rules of Civil Procedure

Before addressing the parties' arguments, we note that the parties disagree about how the Federal Rules of Civil Procedure should be applied to a motion to dismiss based on a forum selection clause. Short of suggesting that such a motion should be treated as a Rule 12(b)(6) motion for failure to state a claim upon which relief can be granted, where the allegations in the complaint must be accepted as true and construed in the light most favorable to the plaintiff, Banco Mexicano maintains that it need not controvert Appellants' characterization of the facts on a motion to dismiss. Notwithstanding this argument, Banco Mexicano did submit the affidavits of its attorney and a bank officer to the district court. 6 Appellants, who submitted several exhibits including three affidavits to the district court, 7 argue in their

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reply brief on appeal that the panel should treat the motion to dismiss as a Rule 12(b)(6) motion that has been converted to a summary judgment motion.

The district court concluded that venue in the District of Arizona was improper in light of the forum selection clause, but did not specify whether it considered the motion as one under Rule 12(b)(3) (dismissal for improper venue) or Rule 12(b)(6). It did, however, consider evidence outside of the pleadings that both parties submitted and its order specifically cited the affidavits of Jack Binns and Gabriel...

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