R5 Partners, Inc. v. Renatus Advisors LLC et al

Filing 34

OPINION AND ORDER: For the reasons set forth in this Opinion and Order, the Court NOTES Plaintiff's Motion in Compliance with Order to Show Cause at Docket No. 33 . Plaintiff's claims as to Renatus, LLC are hereby DISMISSED WIT HOUT PREJUDICE. Renatus' Motion to Dismiss at Docket No. 14 is MOOT. Plaintiff may refile its claims against Renatus in the court specified in the forum selection clause. Partial Final Judgment shall be entered accordingly. Signed by Judge Raul M. Arias-Marxuach on 3/11/2025.(mrr)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO
R5 PARTNERS, INC.,
Plaintiff,
CIVIL NO. 24-1440 (RAM)

v.
RENATUS ADVISORS, LLC AND ERIC
SWIDER,
Defendants.

OPINION AND ORDER
RAÚL M. ARIAS-MARXUACH, United States District Judge
This matter comes before the Court on Plaintiff R5 Partners,
Inc.’s (“Plaintiff” or “R5 Partners”) Motion in Compliance with
Order to Show Cause at Docket No. 33. For the reasons outlined
below, the Court finds that there is a valid mandatory forum
selection

clause

Plaintiff’s

claims

requiring

DISMISSAL

WITHOUT

PREJUDICE

of

against

co-defendant

Renatus

Advisors,

LLC

(“Renatus”).
I.

PROCEDURAL AND FACTUAL BACKGROUND

On September 19, 2024, Plaintiff filed its Complaint against
Renatus and Eric Swider (“Mr. Swider”), collectively “Defendants,”
for failure to comply with the terms of a Promissory Note Agreement
and an Unlimited Personal Guaranty Agreement. (Docket No. 1).
Plaintiff asserts that on June 1, 2021, Renatus, represented by
its

managing

partner

Mr.

Swider,

and

Brian

C.

Shevland

(Mr.

Civil No. 24-1440 (RAM)

2

Shevland) or the entity that he designates, namely R5 Partners,
executed the Promissory Note Agreement (the “Promissory Note”).
(Docket Nos. 1 ¶ 14-15; 1-1).
Pursuant to the terms of the Promissory Note, the entity
designated by Mr. Shevland (the Lender, i.e. R5 Partners), agreed
to

loan

Renatus

(the

Borrower)

fifty

thousand

dollars

($50,000.00). (Docket No. 1-1 at 1). In return, Renatus agreed to
(1) pay interest on the Promissory Note equal to one percent (1%)
annum; and (2) share fifty percent (50%) of all net revenue
received by Renatus and Mr. Swider. Id. at 1-2. However, any sums
of interest that were not paid on the maturity date, would bear
interest at the highest lawful rate or, in the alternative, at a
rate of thirteen percent (13%) a month). Id. Importantly, the Note
also contained the following forum selection clause:
This Promissory Note shall be governed by, and
construed in accordance with, the laws of the
Commonwealth of Puerto Rico, without regard to
the conflict of law principles thereof. All
actions or proceedings arising in connection
with this Promissory Note may be tried and
litigated in, and the Borrower and the Lender
hereby submit to the exclusive jurisdiction of
the courts of the Commonwealth of Puerto Rico
located in the Municipality of San Juan,
Puerto Rico, and appellate courts from any
thereof.
Id. at 3.
On June 3, 2021, Mr. Swider and the entity designated by Mr.
Shevland

(the

Company,

i.e.,

R5

Partners),

entered

into

an

Civil No. 24-1440 (RAM)
Unlimited

Personal

Agreement”),

whereby

3
Guarantee

Agreement

Mr.

(the

Swider

(the

Guarantor)

“Guarantee
agreed

to

“absolutely and unconditionally guarantee” the prompt payment of
all of Renatus’ obligations under the Promissory Note Agreement.
(Docket No. 1-2 at 1). The Guarantee Agreement contained the
following forum selection provision:
With respect to any claim or action arising
hereunder, the Guarantor . . . irrevocably
submits, at the sole option of the Company, to
the nonexclusive jurisdiction of the Federal
Court or local courts of the Commonwealth of
Puerto Rico located in the Municipality of San
Juan, Puerto Rico, and appellate courts from
any thereof.
Id. at 5. Although the Guarantee Agreement recognizes that Renatus
is the borrower that executed the Promissory Note, Renatus is not
a party to the Guarantee Agreement. Id. at 1, 9.
On September 19, 2024, Plaintiff filed a Complaint for breach
of contract, alleging that Renatus and Mr. Swider failed to honor
the terms of the Promissory Note and/or the Guarantee Agreement.
(Docket

No.

1).

Accordingly,

R5

Partners

seeks

specific

performance of the contract, injunctive relief, monetary damages,
and penalties. Id. at 6-8.
Renatus and Mr. Swider filed separate motions requesting
dismissal under Fed. R. Civ. P. 12(b)(1) and 12(b)(6) on December
23, 2024 and January 10, 2025, respectively. (Docket Nos. 14 and
19).

Plaintiff

filed

a

Memorandum

in

Opposition,

to

which

Civil No. 24-1440 (RAM)

4

Defendant’s filed a joint Reply, and Plaintiff filed a Sur-reply.
(Docket Nos. 22, 26, and 32).
On February 7, 2025, the Court issued an order instructing
Plaintiff to file a memorandum of law showing cause as to why the
Complaint should not be dismissed without prejudice in light of
the forum selection clause contained in the Promissory Note.
(Docket No. 29).
Plaintiff filed the pending Memorandum of Law in Response to
Judge’s Order to Show Cause (the “Memorandum”), presenting two
arguments for why the forum selection clause in the Promissory
Note does not require dismissal. (Docket No. 33). First, Plaintiff
asserts that the forum selection clause is permissive, allowing
for litigation in either the local or federal court located in the
Municipality of San Juan in Commonwealth of Puerto Rico. Id. at 2.
Second, Plaintiff claims that the forum selection clause of the
Guarantee Agreement supersedes that of the Promissory Note. Id. at
2-3.
II.

DISCUSSION

A. The forum selection clause is enforceable
Under federal law, determining the “enforceability of forumselection clauses ordinarily entails several steps.” Rivera v.
Kress Stores of Puerto Rico, Inc., 30 F.4th 98, 103 (1st Cir. 2022)
(citing Claudio-De Leon v. Sistema Universitario Ana G. Mendez,
775

F.3d

41,

46-47

(1st

Cir.

2014)).

First,

the

Court

must

Civil No. 24-1440 (RAM)

5

determine whether the clause at issue is permissive or mandatory.
See Claudio-De Leon, 775 F.3d at 46. Second, the Court must
ascertain the clause’s scope. Id. at 47. The third and “final step
in evaluating the clause involves asking whether there is some
reason the presumption of enforceability should not apply.” Id. at
48 (internal quotation marks and citation omitted). 1
1. The Forum Selection Clause is Mandatory
The Court must first determine the threshold issue of whether
the forum selection clause is mandatory or permissive. “Permissive
forum

selection

jurisdiction’

clauses,

clauses,

often

authorize

described
jurisdiction

as

‘consent

to

and

venue

a

in

designated forum, but do not prohibit litigation elsewhere ... In
contrast, mandatory forum selection clauses contain clear language
indicating that jurisdiction and venue are appropriate exclusively
in the designated forum.” Centro Medico de Turabo, Inc., 575 F.3d
at 17 (quoting 14D Charles Alan Wright, Arthur R. Miller & Edward
H. Cooper, Federal Practice and Procedure § 3803.1 (3d ed.1998)).
Courts are tasked with examining the “specific language of the
contract at issue.” Silva v. Encyclopedia Britannica Inc., 239
F.3d 385, 388 (1st Cir. 2001)).

The First Circuit has held “there is no conflict between federal common law
and Puerto Rico law regarding the enforceability of forum-selection clauses.”
Rivera v. Centro Medico de Turabo, Inc., 575 F.3d 10, 16 (1st Cir. 2009)
(internal quotation marks and citations omitted). Thus, the application of
federal common law does not present a conflict of laws issue.
1

Civil No. 24-1440 (RAM)

6

In its Memorandum, Plaintiff misinterprets the full text of
the forum selection clause. Specifically, Plaintiff alleges that
the clause states that disputes “may be tried and litigated in the
courts of the Commonwealth of Puerto Rico.” (Docket No. 33 at 2)
(emphasis in the original). However, as noted above, the actual
text of the forum selection clause reads as follows:
All
actions
or
proceedings
arising
in
connection with this Promissory Note may be
tried and litigated in, and the Borrower and
the Lender hereby submit to the exclusive
jurisdiction of the courts of the Commonwealth
of Puerto Rico located in the Municipality of
San Juan, Puerto Rico, and appellate courts
from any thereof.
(Docket No. 1-1 at 3). Although this clause uses the phrase “may
be tried and litigated,” upon revision of the entirety of the
language, the forum selection clause must be “deemed mandatory
because it dictates the exclusive forum for litigation.” Kress
Stores, 30 F.4th at 103 (internal quotations omitted). The word
“exclusive”

means

“single”

or

“sole.”

Webster,

https://www.merriam-webster.com/dictionary/exclusive

See

Exclusive,

Merriam

(last visited Mar. 11, 2025) (listing “exclusive jurisdiction” as
an example of usage). Thus, the plain language of the clause
designates the courts of the Commonwealth of Puerto Rico located
in San Juan, Puerto Rico as the only forum for disputes arising
from the Promissory Note.

Civil No. 24-1440 (RAM)

7

Nevertheless, Plaintiff fancifully contends that the “courts
of the Commonwealth of Puerto Rico located in the Municipality of
San Juan” includes the United States District Court located in San
Juan. (Docket No. 33 at 2). However, Plaintiff does not provide
any

supporting

citations

and

authorities

to

that

effect,

as

required by Local Rule 7(a). And the “Commonwealth of Puerto Rico”
is the official title for a specific, distinct legal entity. See
P.R. Const. Art. 1, § 1. (“The Commonwealth of Puerto Rico is
hereby constituted. Its political power emanates from the people
and shall be exercised in accordance with their will, within the
terms of the compact agreed upon between the people of Puerto Rico
and the United States of America.”); Commonwealth of Puerto Rico
v.

Sanchez

Valle,

579

U.S.

59,

65

(2016)

(“The

Puerto

Rico

Constitution created a new political entity, the Commonwealth of
Puerto

Rico[.]”).

Certainly,

if

a

permissive

forum

selection

clause uses the phrase “Courts of the Commonwealth of Puerto Rico,”
the permissive nature of the clause allows litigation in other
courts, including the United States District Court of Puerto Rico.
However, a mandatory forum selection clause whereby the parties
submit

to

the

exclusive

jurisdiction

of

the

courts

of

the

Commonwealth of Puerto Rico necessarily precludes litigation in
the United States District Court for the District of Puerto Rico.

Civil No. 24-1440 (RAM)

8

2. The claims at issue fall within the scope of the clause
The “language of the forum selection clause itself that
determines which claims fall within its scope.” Centro Medico de
Turabo, Inc., 575 F.3d at 19. Here, the forum selection clause in
the Promissory Note applies to “[a]ll actions or proceedings
arising in connection with this Promissory Note[.]” (Docket No. 11 at 3). The First Circuit has held that a clause applicable to
“any action arising out of or in connection with the Agreement” is
“unambiguously broad.” Carter’s of New Bedford, Inc. v. Nike, Inc.,
790 F.3d 289, 293 (1st Cir. 2015). See also Huffington v. T.C.
Grp., LLC, 637 F.3d 18, 22 (1st Cir. 2011) (noting that Courts
have found the phrase “in connection with” “to be broader than the
concept of a causal connection, and to mean simply “connected by
reason of an established or discoverable relation.”) (quotations
omitted).
Here, Plaintiff claims that Defendants have not complied with
the terms of the Promissory Note and seeks specific compliance.
Thus, the present dispute undoubtedly “aris[es] in connection”
with the Promissory Note.
3. The presumption of enforceability should apply
“A forum selection clause is ‘prima facie valid’ and, absent
a ‘strong showing’ by the resisting party that the clause is
‘unreasonable’ under the circumstances,’ it should not be set
aside.” Claudio-De Leon, 775 F.3d at 48 (quoting M/S Bremen v.

Civil No. 24-1440 (RAM)

9

Zapata Off-Shore Co., 407 U.S. 1, 10 (1972)). The First Circuit
has recognized four grounds for finding that a forum selection
clause is unreasonable, and thus unenforceable:
(1) the clause was the product of “fraud or
overreaching”;
(2) “enforcement would be unreasonable and
unjust”;
(3) proceedings “in the contractual forum will
be so gravely difficult and inconvenient that
[the party challenging the clause] will for
all practical purposes be deprived of his day
in court”; or
(4) “enforcement would contravene a strong
public policy of the forum in which suit is
brought, whether declared by statute or by
judicial decision.”
Id. (quoting Rafael Rodriguez Barril, Inc. v. Conbraco Indus.,
Inc., 619 F.3d 90, 93 (1st Cir. 2010)). Plaintiff did not address
the

reasonableness

of

the

forum

selection

clause

in

their

Memorandum. Rather, as will be discussed below, they claim that
the forum selection clause in the Promissory Note was superseded
by the Guarantee Agreement. Thus, the Court need not analyze each
of the above-stated factors and finds that the presumption of
enforceability applies.
B. The forum selection clause in the Guarantee Agreement is
not binding as to Renatus
Plaintiff contends that the Guarantee Agreement supersedes
the forum selection clause in the Promissory Note because it
contains

an

integration

clause

establishing

that:

“[a]ll

understandings, representations, and agreements heretofore had

Civil No. 24-1440 (RAM)
with

respect

to

this

10
Guaranty,

and

the

Promissory

Note,

as

applicable, are merged into this Guaranty, as applicable, which
alone fully and completely express the agreement of the Guarantor
and the Company.” (Docket No. 33 at 2-3). Crucially however,
Renatus is not a party to the Guarantee Agreement.
“In Puerto Rico, contracts are generally only valid between
the parties who execute them, and actions arising out of a contract
can be prosecuted only by one contracting party against the other.”
Calderon v. Patel, No. 22-1540, 2025 WL 71809, at *3 (D.P.R. Jan.
10, 2025) (quoting Dantlzer, Inc. v. Lamas-Besos, 2010 WL 2572618,
at *3 (D.P.R. 2010)). See also P.R. Laws. Ann. Tit. 31 § 9754. The
Court has not found, and Plaintiff has not cited to, any case law
or authorities to support R5 Partner’s argument that the forum
selection

clause

in

the

Guarantee

Agreement

with

Mr.

Swider

modified the terms of the Promissory Note executed with Renatus.
See L. CV. R. 7(a). 2
III. CONCLUSION
For the foregoing reasons, the Court NOTES Plaintiff’s Motion
in

Compliance

with

Order

to

Show

Cause

at

Docket

No.

33.

By the same token, the forum selection clause of the Promissory Note does not
apply to Plaintiff’s claims as to Mr. Swider. See Nulogy Corp. v. Menasha
Packaging Co., LLC, 76 F.4th 675 (7th Cir. 2023) (when tasked with evaluating
co-defendants bound to different forum selection clauses, the Seventh Circuit
noted that although litigating closely related claims in different forums is
not ideal, it ensures that each co-defendant benefits from the contract it
agreed to and for which it provided consideration).
2

Civil No. 24-1440 (RAM)

11

Plaintiff’s claims as to Renatus are hereby DISMISSED WITHOUT
PREJUDICE. Renatus’ Motion to Dismiss at Docket No. 14 is MOOT.
Plaintiff may refile its claims against Renatus in the court
specified in the forum selection clause.
IT IS SO ORDERED.
In San Juan, Puerto Rico, this 11th day of March 2024.
s/Raúl M. Arias-Marxuach_________
UNITED STATES DISTRICT JUDGE