Quail Cruises Ship Mgmt. Ltd. v. Agencia de Viagens CVC Tur Limitada
Decision Date | 06 August 2010 |
Docket Number | Case No. 09-23248-CIV |
Citation | 732 F.Supp.2d 1345 |
Parties | QUAIL CRUISES SHIP MANAGEMENT LTD., Plaintiff, v. AGENCIA DE VIAGENS CVC TUR LIMITADA, et al., Defendants. |
Court | U.S. District Court — Southern District of Florida |
Brian A. Briz, George Mencio, Jr., Holland & Knight LLP, Miami, FL, Vincent J. Foley, Holland & Knight LLP, New York, NY, for Plaintiff.
Michael T. Moore, Clay Michael Naughton, Scott Andrew Wagner, Moore & Company, Coral Gables, FL, Amber Elaine Ferry, Moore & Company, P.A., Coral Gables, FL, Allan Richard Kelley, Helaine S. Goodner, Fowler White Burnett, Miami, FL, Elliot Schnapp, Kenneth E. Gordon, Gordon Gordon Schnapp PC, New York, NY, for Defendants.
ORDER ON MOTIONS TO DISMISS AMENDED COMPLAINT
This case, arising out of a foreign corporation's purchase of another foreign corporation's stock from its foreign owner in order to acquire a foreign-flagged vessel operating in foreign waters, is before the Court on three motions to dismiss the Plaintiff's Amended Complaint. The Court has considered the motions and associated briefing, and is otherwise duly advised. Because the Plaintiff has failed to establish a basis for subject matter jurisdiction, the Court will dismiss the Amended Complaint.
The Plaintiff, Quail Cruises Ship Management Ltd., is a Bahamian corporation whose principal place of business is in Spain. Quail operates cruises in the Mediterranean, Adriatic, West Atlantic, and Caribbean. Quail alleges that the Defendants fraudulently induced it into purchasing the M/V Pacific via a stock purchase of Templeton International Inc., a Bahamian corporation whose principle asset is the Pacific. Quail purchased the Templeton stock from Flameck International, S.A., a Uruguayan corporation. Flameck is not a party to this action because the share purchase agreement contains a mandatory arbitration clause.
Quail claims the Defendants induced it to purchase the Pacific by intentionally misrepresenting the vessel's condition and systematically concealing its defects. Defendant Agencia de Viagens CVC Tur Limitada (CVC) is a Brazilian corporation and prior owner of the Pacific. Defendant Valter Patriani, CVC's president, is also a resident of Brazil. Defendant SeaHawk North America, LLC, is a Florida LLC, and its president, Defendant Rodolfo Spinelli, also resides in Florida. Finally, Defendant Lloyd's Register North America is a Delaware corporation.
The facts surrounding this transaction are recounted at greater length in an earlier order dismissing Quail's first complaint for lack of subject matter jurisdiction and failure to state a claim.Quail Cruises Ship Mgmt. Ltd. v. Agencia De Viagens Cvc Tur Limitada, No. 09-23248, 2010 WL 1524313 (S.D.Fla. Apr. 14, 2010). In its previous order, the Court dismissed the complaint on several grounds. The Court held that Quail's claims against Lloyd's were governed by a binding forum selection clause under the theory of direct benefit estoppel. However, at oral argument Quail claimed for the time that the clause is unconscionable. The Court then permitted Quail to file an amended complaint raising that issue. The Court also dismissed the securities fraud claims and maritime claims, finding that it lacked subject matter jurisdiction and that the claims failed to state a cause of action. As there are foreign parties on both sides of this suit, diversity jurisdiction is unavailable. U.S. Motors v. GM Eur., 551 F.3d 420, 423-24 (6th Cir.2008). Finally, the Court dismissed the common law claims because, without securities fraud or maritime claims, or diversity jurisdiction, no basis for supplemental jurisdiction remained.
The Amended Complaint alleges securities fraud under Section 10(b) of the Securities and Exchange Act of 1934, maritime fraud in the inducement, maritime recklessness, and common law claims for civil conspiracy, negligence and negligent misrepresentation, fraud in the inducement, and breach of fiduciary duty. CVC, Patriani, SeaHawk, and Spinelli move to dismiss the Amended Complaint for lack of subject matter jurisdiction. Patriani also moves to dismiss for lack of personal jurisdiction. Finally, Lloyd's moves to dismiss pursuant to a forum selection clause requiring suit in England.1 Although the allegations in the Amended Complaint contain slightly greater detail than Quail's initial complaint, the contours of the material allegations are unchanged and the Amended Complaint is also subject to dismissal.
In dismissing Quail's first complaint, the Court noted a circuit split on the issue of the level of domestic conduct in foreign securities transactions sufficient to invoke federal subject matter jurisdiction over securities fraud claims. Quail Cruises, 2010 WL 1524313, at *6 n. 2. The Supreme Court resolved this split in Morrison v. National Australia Bank Ltd., --- U.S. ----, 130 S.Ct. 2869, 177 L.Ed.2d 535 (2010), by rejecting the jurisdictional tests previously employed by the courts of appeals. Morrison retired the "conduct" and "effects" tests previously used by lower courts for determining the extraterritorial application of Section 10(b) of the Securities Exchange Act of 1934. In so doing, the Supreme Court declined to give the securities act any extraterritorial effect in light of the judicial presumption against the extraterritorial application of a federal statute.
Specifically, Morrison held that fraud in connection with the purchase of stock in an Australian bank by Australian investors was not actionable under Section 10(b). Adopting what it described as a "transactional test," Morrison construed Section 10(b) to reach "the use of a manipulative or deceptive device or contrivance only inconnection with the purchase or sale of a security listed on an American stock exchange, and the purchase or sale of any other security in the United States." 130 S.Ct. at 2888.
Morrison also held that the issue of extraterritoriality is properly considered a merits issue under Rule 12(b)(6), not a question of subject matter jurisdiction under Rule 12(b)(1). Although the Supreme Court decided Morrison after the Defendants filed their motion to dismiss the Amended Complaint, both sides subsequently briefed the impact of Morrison on Quail's securities fraud claim. Post- Morrison, a securities fraud plaintiff must allege the purchase or sale of a security listed on an American exchange or the purchase or sale of a security in the United States. As Quail's Amended Complaint contains neither allegation, the securities fraud count will be dismissed.
Quail argues that its allegations satisfy the second prong of Morrison 's transaction test because Quail purchased stock in the United States. According to the Amended Complaint: "The stock transfer was made pursuant to an agreement subject to Florida law, and documentation required for the transfer of the stock was sent by means of interstate commerce into this District, as the parties intended the closing to occur in this District." Quail argues that in light of this allegation the Court should hold that the purchase and sale of the securities occurred in the United States.
The Amended Complaint does not allege that the closing actually occurred in the United States but merely that the parties so intended. Rather than specifically singling out the United States itself as the place for closing the transaction, the agreement designated the Miami offices of Holland & Knight LLP, which served as counsel to one of the parties, as the place of closing. Moreover, the share purchase agreement was signed by the president of Flameck and a representative of Quail. None of the Defendants were signatories to the agreement and, other than Quail's conclusory allegation, there is no evidence that any of the Defendants intended the closing to occur in the United States. The agreement itself was not signed in the United States but was executed in duplicate, apparently signed in Quail and Flameck's home offices in Spain and Uruguay respectively. Furthermore, the agreement explicitly requires that any notices, consents, waivers, or other communications pursuant to the agreement be in writing and sent and delivered, if addressed to the seller, to Flameck's office in Uruguay or, if addressed to the buyer, to Quail's office in Spain.
The Defendants argue that the purchase did not occur in the United States merely because the parties intended the transaction to close in Holland & Knight's Miami law office and documents associated with the transaction were sent into that office. As Morrison noted, 130 S.Ct. at 2884. It is instructive that Morrison relied, in part, on EEOC v. Arabian American Oil Co., 499 U.S. 244, 111 S.Ct. 1227, 113 L.Ed.2d 274 (1991) ( Aramco ), which held that Title VII did not apply extraterritorially. In Aramco, the plaintiff, an American citizen hired in Houston, sued under Title VII after being fired by anAmerican company while working in Saudi Arabia. Because of the judicial presumption that Congress, absent a contrary indication in the statutory text, is ordinarily concerned with regulating domestic conduct, Aramco found that the plaintiff could not bring a Title VII claim for his overseas termination.
The Defendants also contend that Morrison 's central holding would be undermined if parties could elect United States securities law merely by designating the law offices of one of the parties' counsel, located in the United States, as the place of closing the transaction when the transaction otherwise has no relationship with the United States. The Court agrees with the Defendants' analysis. Just as Title VII concerns domestic employment, the Securities and...
To continue reading
Request your trial-
Plumbers' Union Local No. 12 Pension Fund v. Swiss Reinsurance Co.
...trades executed on foreign exchanges even if purchased by American investors”); Quail Cruises Ship Mgmt. Ltd. v. Agencia de Viagens CVC Tur Limitada, 732 F.Supp.2d 1345, 1349–50 (S.D.Fla.2010) (holding that a purchase agreement for a foreign corporation's stock is not subject to section 10(......
-
Quail Cruises Ship Mgmt., Ltd. v. Agencia De Viagens CVC Tur Limitada
...negligence and negligent misrepresentation, fraud in the inducement, and breach of fiduciary duty. On August 6, 2010, 732 F.Supp.2d 1345 (S.D.Fla.2010), this Court dismissed the Amended Complaint. This Court determined that Quail's securities fraud claim was insufficient under the “transact......
-
Sec. v. Goldman Sachs & Co.
...or sale ... made in the United States,” 130 S.Ct. at 2886, is not determinative. See Quail Cruises Ship Mgmt. Ltd. v. Agencia de Viagens CVC Tur Limitada, 732 F.Supp.2d 1345, 1350 (S.D.Fla.2010) (holding that even if the transaction closed in Miami, “the relevant conduct, ... the purchase o......
-
Sec. & Exch. Comm'n v. Tourre
...or sale . . . made in the United States isnot determinative." Id. at 158-59 (citing Quail Cruises Ship Mgmt. Ltd. v. Agenda de Viagens CVC Tur Limitada, 732 F. Supp. 2d 1345, 1350 (S.D. Fla. 2010))7 (quotation marks and citations omitted). Thus, the Court dismissed the section 10(b) and Rul......