Bahamas Sales Assoc., LLC v. Byers
| Decision Date | 04 December 2012 |
| Docket Number | No. 11–11664.,11–11664. |
| Citation | 701 F.3d 1335 |
| Parties | BAHAMAS SALES ASSOCIATE, LLC, Plaintiff–Counter Defendant–Appellee, v. Donald Cameron BYERS, Defendant–Counter Claimant–Appellant, v. Ginn Financial Services, LLC, Bahamas Sales Associate, LLC, Ginn Title Services, LLC, and Edward R. Ginn, III, Counter Defendants–Appellees. |
| Court | U.S. Court of Appeals — Eleventh Circuit |
OPINION TEXT STARTS HERE
Robert Philip Alpert, Lawrence Hugh Kunin, John P. MacNaughton, Morris, Manning & Martin, LLP, Atlanta, GA, for Plaintiff–Counter Defendant–Appellee.
Dana Louise Ballinger, Ballinger Law Office, Sanibel, FL, for Defendant–Counter Claimant–Appellant.
Lynn F. Chandler, Smith, Moore, Leatherwood, LLP, Charlotte, NC, for Counter Defendant–Appellee.
Appeal from the United States District Court for the Middle District of Florida.
Before HULL, MARCUS and COX, Circuit Judges.
In late 2006, Donald Cameron Byers purchased a lot in the Bahamas. His purchase contract contains a provision that requires all disputes to be litigated in the Bahamas under Bahamian law. Byers financed the purchase with a mortgage loan made by Bahamas Sales Associate, LLC (Bahamas Sales), a mortgage lender. After Byers failed to make payments on the mortgage note, Bahamas Sales sued Byers in the Middle District of Florida. Byers counterclaimed against Bahamas Sales and others associated with Bahamas Sales, alleging that they engaged in appraisal fraud. The defendants to the counterclaim moved the court to dismiss Byers's counterclaim for improper venue, arguing that, under the purchase contract, venue is proper only in the Bahamas. The district court held that the counterclaim fell within the scope of the forum-selection clause in the purchase contract. The court then applied the doctrine of equitable estoppel to allow the Counterclaim Defendants (all of which are nonsignatories to the purchase contract) to invoke that forum-selection clause requiring that the case be litigated in the Bahamas. The court then dismissed the case for improper venue. Byers appeals the dismissal. We reverse and remand.
Donald Byers purchased a lot in the Ginn Sur Mer subdivision on Grand Bahama Island in the Bahamas from Ginn–LA West End Limited (Ginn–LA). (R.3–89 Ex. 1.) The parties signed a lot purchase contract that contains a forum-selection clause and a choice-of-law clause that requires all disputes to be litigated in Bahamian courts under Bahamian law. ( Id. ¶ 22, at 14.) Specifically, the forum-selection clause provides:
[T]he courts of the Commonwealth (“Commonwealth Courts”) will be the venue for any dispute, proceeding, suit or legal action concerning the interpretation, construction, validity, enforcement, performance of, or related in any way to, this Contract or any other agreement or instrument executed in connection with this Contract. In the event any such suit or legal action is commenced by any party, the other parties agree, consent, and submit to the personal jurisdiction of the Commonwealth Courts with respect to such suit or legal action. In such event, each party waives any and all rights under applicable law or in equity to object to jurisdiction or venue of the Commonwealth Court. Such jurisdiction and venue shall be exclusive of any other jurisdiction and venue.
( Id.) The choice-of-law clause reads as follows: “The local laws of the Commonwealth, without regard to the Commonwealth's choice of law rules, will exclusively govern the interpretation, application, enforcement, performance of, and any other matter related to, this Contract.” ( Id.) Only Byers and Ginn–LA signed the lot purchase contract. ( Id. at 19.) Byers's obligation under the lot purchase contract was not contingent on his ability to obtain financing. ( Id. ¶ 4, at 4.)
After entering into the contract, Byers applied for and received mortgage financing from Bahamas Sales. (R.1–1 Ex. A.) The mortgage note also contains a forum-selection clause and a choice-of-law clause. The clauses require that all disputes be litigated in Florida under Florida law. ( Id. ¶ 11, at 4.) The relevant provision states:
This Note and the rights and obligations of Borrower and Lender shall be governed by and interpreted in accordance with the law of the State of Florida. In any litigation in connection with or to enforce this Note or any endorsement or guaranty of this Note or any loan documents, obligors, and each of them, irrevocably consent to and confer personal jurisdiction on the courts of the State of Florida or the United States located within the State of Florida and expressly waive any objections as to venue in any such courts.
( Id.) Only Byers and Bahamas Sales are parties to the mortgage note. ( Id. at 5.)
Apparently the real estate market tanked sometime after Byers closed the purchase and mortgage loan. And in October 2008, Bahamas Sales sued Byers in the Middle District of Florida for his failure to make payments on the mortgage note. (R.1–1.) In response, Byers filed a counterclaim alleging that Bahamas Sales, Ginn Financial Services (the parent company of Bahamas Sales), Bobby Ginn (an officer of Bahama Sales), and Ginn Title Services (together, the Mortgage Entities)2 participated in a scheme to produce fraudulent lot appraisals in violation of the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. §§ 1961– 1968 (2006).3 (R.3–83.) The counterclaim seeks rescission of the note and mortgage and restitution of payments previously made on the note. ( Id.)
Byers's counterclaim alleges that the Mortgage Entities fraudulently inflated the appraisal of his Ginn Sur Mer lot and used that inflated appraisal to set the amount on the mortgage note. ( Id. at 17–19.) Because of the inflated appraisal, Byers alleges, he closed on the mortgage note and mortgage for an amount that far exceeded the market value of the lot. ( Id.) The appraisal fraud claims are based on the assumption that if a proper appraisal had been done and the lot appraised for an amount lower than its sales price, Byers would not have closed the purchase of the lot. ( Id. ¶ 103, at 18.) Further, if a proper appraisal had been done and the lot appraised for a value less than its purchase price, Byers could have simply walked away from the lot purchase contract and paid only liquidated damages for his failure to close the purchase. ( Id.)
The district court dismissed Bahamas Sales's breach-of-contract claim against Byers for lack of subject-matter jurisdiction.4 (R.5–132 at 3–4.) But the district court retained jurisdiction over Byers's counterclaim. ( Id. at 4.)
Rather than answering Byers's counterclaim, the Mortgage Entities filed a motion to dismiss, asserting that venue would be proper only in the Bahamas under the forum-selection clause in the lot purchase contract. (R.3–89.) The district court agreed. The court held that Byers's counterclaim falls within the scope of the lot purchase contract's forum-selection clause. (R.5–132.) It also held that the Mortgage Entities, though not signatories to the lot purchase contract, could nevertheless enforce the forum-selection clause under the doctrine of equitable estoppel. ( Id.) We reverse and remand.
This appeal presents three issues: first, whether Bahamas Sales is bound by the forum-selection clause in the mortgage note that selects Florida courts as the forum; second, whether the district court erred in concluding that Byers's claims fall within the scope of the lot purchase contract's forum-selection clause; and third, whether the district court improperly applied the doctrine of equitable estoppel to allow these nonsignatories to enforce the lot purchase contract's forum-selection clause.
The enforceability of a forum-selection clause is a question of law that we review de novo. Slater v. Energy Servs. Grp. Int'l, Inc., 634 F.3d 1326, 1329–30 (11th Cir.2011). Further, whether the doctrine of equitable estoppel applies is a question of law that we review de novo. MS Dealer Serv. Corp. v. Franklin, 177 F.3d 942, 946 (11th Cir.1999).
Byers challenges the district court's dismissal for improper venue on three grounds. Byers asserts that (A) Bahamas Sales agreed to venue in Florida under the mortgage note; (B) the lot purchase contract's forum-selection clause does not cover the counterclaim;5 and (C) the Mortgage Entities, as nonsignatories to the lot purchase contract, cannot invoke the lot purchase contract's forum-selection clause. We address each issue in turn.
Byers first argues that the mortgage note's forum-selection clause binds Bahamas Sales as a party to the mortgage note and that under this forum-selection clause, Bahamas Sales waived any objection to venue in Florida.
To determine whether Bahamas Sales is bound by the note's clause, we look first to the language of the clause. Slater, 634 F.3d at 1330 (). The forum-selection clause reads as follows: “[i]n any litigation in connection with or to enforce this Note ... obligors, and each of them, irrevocably consent to and confer personal jurisdiction on the courts of the State of Florida or the United States located within the State of Florida ....” (R.1–1 Ex. A ¶ 11, at 4.) The essential term to the resolution of this issue is “obligors.” An obligor is “one who has undertaken an obligation.” Black's Law Dictionary 1181 (9th ed. 2009). Byers is the obligor under the mortgage note because the note obligates him to repay the debt. Bahamas Sales is not an obligor; it is the party to which an obligation is owed. The forum-selection clause binds only Byers.
We therefore reject Byers's argument that Bahamas Sales waived any objection to venue in Florida. Bahamas Sales is not an obligor under the note and is not bound by the provision waiving objections to venue in the forum-selection clause.
Byers's next argument is...
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