Clinton v. Janger

• Decision Date: 21 March 1984
• Docket Number: No. 82 C 7046.,82 C 7046.
• Citation: 583 F. Supp. 284
• Parties: Zylpha CLINTON and Lloyd J. Boggio, as Trustee under Deed of Settlement T 5062, Plaintiff, v. Richard JANGER, et al., Defendants.
• Court: U.S. District Court — Northern District of Illinois

583 F. Supp. 284

Zylpha CLINTON and Lloyd J. Boggio, as Trustee under Deed of Settlement T 5062, Plaintiff, v. Richard JANGER, et al., Defendants.

No. 82 C 7046.

United States District Court, N.D. Illinois, E.D.

March 21, 1984.

John I. Grossbart, Stanley J. Adelman (A), James F. Holderman, Sonnenschein, Carlin, Nath & Rosenthal, Chicago, Ill., for plaintiff.

Robert G. Krupka, Richard H. Schneider, Chicago, Ill., for Paget-Brown.

Gary L. Prior, Daniel P. Shapiro, McDermott Will & Emery, Chicago, Ill., for Lion Corp. Ltd.

Stephen J. Sptiz, Bruce S. Sperling, Eugene J. Frett, Sperling, Slater & Spitz, Chicago, Ill., for Janger.

MEMORANDUM OPINION AND ORDER

WILLIAM T. HART, District Judge.

Plaintiffs Zylpha Clinton ("Clinton") and Lloyd J. Boggio ("Boggio"), respectively the beneficiary and trustee of a trust, claim that the defendants have violated the provisions of several trusts and their duties thereunder. Specifically, the plaintiffs allege violations of the federal Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. §§ 1961 et seq. (1976), and violations asserted pursuant to the Court's diversity jurisdiction: common law fraud, misappropriation, conversion, conspiracy and breach of trust and fiduciary obligations. Subject matter jurisdiction is asserted pursuant to 18 U.S.C. § 1964 (1976) and 28 U.S.C. § 1332(a) (1976).

Parties

The complaint, briefs and affidavits filed relative to the instant motion allege the following. Clinton is the beneficiary of the trusts under consideration. She is a resident and citizen of the State of Florida. Boggio is the present trustee. He is also a resident and citizen of the State of Florida.

Defendant Janger ("Janger") is a lawyer who, while employed by the firm of Levenfeld, Kanter, Baskes and Lippitz ("Levenfeld"), represented Clinton in connection with the administration of the first trust agreement. Janger is a resident and citizen of Illinois.

Another attorney, Jerry Biederman ("Biederman"), subsequently represented Clinton in connection with the administration of the trusts. Biederman was an associate of and subordinate to Janger at Levenfeld. Biederman is not a party to this suit.

Defendant Lion Corporation ("Lion") is a former trustee of one of the trusts. It is a trust corporation incorporated under the laws of the Caymen Islands, having its principal place of business in the Caymen Islands, British West Indies. Lion is owned and managed by defendant Ian Paget-Brown ("Paget-Brown").

Defendant Siskin Corporation ("Siskin") is also a former trustee of one the trusts. It is a trust corporation incorporated under the laws of the Channel Islands, having its principal place of business in Jersey, Channel Islands. Siskin too is owned and managed by Paget-Brown.

Paget-Brown is a British subject who resides in Grand Caymen, Caymen Islands. He is a lawyer and the owner and managing agent of Lion and Siskin.

Defendant Guiness Mahon Guernsey Limited ("GMG") is a banking corporation in which the trust assets were deposited at one time. It is incorporated under the laws of the Channel Islands, having its principal place of business in Guernsey, Channel Islands.

Defendant Bayeux Trustees Limited ("Bayeux") is a former trustee of one of the trusts. It is a trust corporation incorporated under the laws of the Channel Islands, having its principal place of business in Guernsey, Channel Islands.

Presently pending are the motions to dismiss of the defendants Paget-Brown, Lion, Siskin, GMG and Bayeux. Each has moved to dismiss the action pursuant to Fed.R. Civ.P. 12. The defendants contend that the Court lacks jurisdiction on three grounds: (1) the various forum selection clauses contained in each trust agreement preclude the Court from exercising jurisdiction over the defendants; (2) the Court lacks personal jurisdiction over each defendant due to insufficient contacts in this District; and (3) this Court is inconvenient under the doctrine of forum non conveniens.

Facts

The first trust ("Trust One") was executed on February 1, 1968, naming Clinton as its beneficiary and Castle Trust Company Limited ("Castle") as trustee. Trust One was established under Bahamian law and contained a forum selection clause which provided that

The rights of all parties and the interpretation, construction and effect of each and every provision hereof shall be subject to the exclusive jurisdiction of and construed and regulated according to the laws of the Bahama Islands which shall be the forum for the administration thereof.

During 1975, Paget-Brown arranged for the incorporation of Lion for the purpose of succeeding Castle as trustee under Trust One. These arrangements were made at the request of a Levenfeld attorney. In January, 1976, Castle resigned as trustee, with Clinton's consent. Lion succeeded Castle as trustee of Trust One in February, 1976.

In November, 1979, Clinton allegedly requested that Levenfeld replace Lion with a trustee that was not affiliated with Paget-Brown. Subsequently, either Janger or Paget-Brown allegedly told Biederman that the trusteeship had been transferred from Lion to Bayeux. Bayeux is not affiliated with Lion. But Bayeux was not named trustee at that time. Instead, the trusteeship apparently was transferred in November, 1979 from Lion to Siskin. Siskin is another trust company owned and operated by Paget-Brown. There is no indication from the facts alleged that either Biederman or Clinton was advised of the true nature of the transfer. Incident to the transfer to Siskin, a second trust agreement ("Trust Two") was drafted. The Court is not advised of who, if anyone, executed Trust Two. Trust Two contained a forum selection clause similar to that in Trust One, except that it made Jersey, Channel Islands the applicable law and forum. The trust assets allegedly were deposited with GMG in the Channel Islands.

In October, 1980, Biederman learned of the allegedly improper transfer of Trust One from Lion to Siskin. Biederman executed a consent and release. Siskin was released of all liability for Trust Two and the impending transfer from Siskin to Bayeux was made retroactive to November, 1979. The consent and release allegedly occurred without Clinton's knowledge.

In December, 1980, Bayeux drew up a third trust agreement to formally transfer the trust from Siskin to Bayeux ("Trust Three"). Clinton was asked to execute this agreement in February, 1981. It was at this time that Clinton claims to have become aware of Trust Two, the intermediate transfer to Siskin. Eventually Clinton signed the Trust Three documents. In June, 1981, Bayeux became the new trustee. Trust Three contained a forum selection clause similar to those contained in the first two trust agreements, except that it made Guernsey, Channel Islands the applicable law and forum.

Discussion

In bringing their motions to dismiss, each defendant contends that this Court lacks jurisdiction because one or more of the forum selection clauses contained in the three trust agreements should be enforced, and this case transferred from the United States District Court for the Northern District of Illinois. The plaintiffs, however, deny the applicability of any of the clauses, claiming that: (1) the subject matter of this lawsuit does not fall within the scope of any clause; (2) the simultaneous enforcement of all three clauses would be unreasonable; and (3) only parties to the agreements may take advantage of the clauses.

(1) Subject Matter of Dispute

In order to enforce any or all of the forum selection clauses, the Court first must determine that the subject matter of the dispute is one contemplated under the terms of that clause. The wording of the three clauses is identical but for the place named: "the rights of all parties and the interpretation, construction and effect of each and every provision hereof shall be subject to" the laws of a designated place. The plaintiffs argue that the clauses are binding only on disputes arising from the interpretation of the trusts, while the defendants claim that the clauses also control tortious conduct which might arise from misfeasance or malfeasance in the administration or execution of any of the trusts.

In Coastal Steel Corp. v. Tilghman Wheelabrator, Ltd., 709 F.2d 190 (3d Cir. 1983), cert. denied, ___ U.S. ___, 104 S.Ct. 349, 78 L.Ed.2d 315 (1983), the plaintiff, a New Jersey steel fabricator, contracted with a British corporation for a plant to be built in New Jersey. The British corporation then contracted ("Contract II") with another British corporation to build a component of the New Jersey plant. Contract II provided that "these conditions shall be construed in accordance with English law. In the event of any dispute arising the same shall be determined by the English Courts of Law." (emphasis added). 709 F.2d at 193. When a dispute arose between the parties to Contract II, the plaintiff sought to assert both contract and tort claims against the defendant in the United States District Court for the District of New Jersey. The defendant moved to dismiss, arguing that the forum selection clause in Contract II provided that all disputes were to be settled in England. The plaintiff responded that the forum selection clause was inapplicable since the plaintiff had asserted tort claims, whereas the forum selection clause contemplated only resolution of contractual disputes.

The Third Circuit held that there was "no evidence suggesting that the clause in Contract II was not intended to apply to all claims growing out of the contractual relationship. If forum selection clauses are to be enforced as a matter of public policy, that same public policy requires that they not be defeated by artful pleading of claims ...." 709 F.2d at 203.

Other courts have enforced "general" forum selection clauses so as to subsume within a clause's coverage both contract and tort claims. See, e.g., Scherk v. Alberto-Culver Co., 417 U.S. 506, 508, 94 S.Ct....