Bancroft Life & Casualty ICC, Ltd. v. FFD Resources III, LLC
Filing
53
MEMORANDUM AND ORDER on 39 MOTION to Dismiss the Counterclaims (Signed by Judge Ewing Werlein, Jr) Parties notified.(kcarr, )
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
BANCROFT LIFE & CASUALTY
ICC, LTD.,
Plaintiff,
v.
FFD RESOURCES III, LLC,
Defendant,
FFD RESOURCES III, LLC and
FFD VENTURES, LP,
Counter-Plaintiffs,
v.
BANCROFT LIFE & CASUALTY
ICC, LTD.,
Counter-Defendant.
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CIVIL ACTION NO. H-11-2382
MEMORANDUM AND ORDER
Pending is Counterclaim-Defendant Bancroft Life & Casualty
ICC, Ltd.’s Motion to Dismiss the Counterclaims (Document No. 39).
After having reviewed the motion, response, reply, and applicable
law, the Court concludes as follows.
I.
Background
Plaintiff and Counter-Defendant Bancroft Life & Casualty ICC,
Ltd. (“Bancroft”) is an insurance company based in St. Lucia that
sells insurance for certain business losses.1
Counter-Plaintiffs
FFD Ventures (“Ventures”) and FFD Resources III, LLC (“FFD3,”
collectively, “Counter-Plaintiffs”), which are affiliated payday
loan companies,2 allegedly bought Bancroft’s insurance product,
“Premium Lite,” to cover the risk of losses on payday loans.
Richard Clay (“Clay”),3 General Partner for Ventures, signed the
Application for Insurance (“Application”) on Ventures’s behalf.4
FFD3 and two other related companies are listed on the Certificate
of Insurance (“Certificate”) as “Additional Insureds.”5
Bancroft allegedly gives to its insureds the opportunity to
borrow back 70% of their premiums in the form of loans that are
1
Document No. 21 at 10 ¶ 2.
2
See Document No. 1. at 2.
3
Document No. 21 at 16 ¶ 21.
4
See id. at 16-19 & ex. N.
5
See Document No. 39, ex. 1 and Document No. 21, ex. A
(Certificates of Insurance naming FFD Ventures as the “Certificate
Holder” and FFD Resources I, FFD Resources II, FFD Resources III,
and FFD Resources IV as “Additional Insureds”). FFD3 and Ventures
are indirectly affiliated through a web of companies. Bancroft has
filed at least four lawsuits against the FFD-related companies
listed as Additional Insureds and Richard Clay: (1) Bancroft Life
& Casualty ICC, Ltd. v. FFD Resources III, LLC, No. 4:11-cv-2382
(the present lawsuit before this Court); (2) Bancroft Life &
Casualty ICC, Ltd. v. FFD Resources II, LLC, No. 4:11-cv-2384
(pending in Judge Harmon’s court); (3) Bancroft Life & Casualty
ICC, Ltd. v. FFD Resources IV, LLC, No. 3:11-cv-214-LRH-WGC
(pending in the district of Nevada); and (4) Bancroft Life &
Casualty ICC, Ltd. v. Richard Clay, No. 1:11-cv-01505-SCJ (pending
in the Northern District of Georgia).
2
represented by promissory notes and are secured by collateral.6
After approximately three years of successful business dealings
with each other,7 Bancroft alleges that FFD3 failed to pay on
certain notes and filed this suit to collect $248,234.00, plus
interest and collection costs, and to foreclose on the collateral.8
FFD3, joined by its affiliate Ventures, counterclaimed against
Bancroft, alleging: breach of contract for failure to pay the
insurance claim and failure to return unused premium; conversion;
fraudulent inducement; breach of fiduciary duty; unjust enrichment;
an accounting; rescission; declaratory judgment that the promissory
notes are not due and owing; and a declaration of their rights
under the insurance policy.9
The issue presented here is whether this Court should grant
Bancroft’s motion to dismiss the counterclaims based upon a proviso
in the insurance policy that St. Lucia is the exclusive venue for
actions “arising from or in any way related to the Policy or any
6
Document No. 21 at 17-19 ¶¶ 24, 31.
7
Bancroft claims that although FFD3 paid the amounts due for
the years 2007, 2008, and 2009, it failed to pay the December 2010
loan payment. Document No. 1 at 7.
8
Document No. 1 at 1 (Orig. Complt.); see also id., exs. A-1,
A-2, A-3, A-4, B-1, B-2, B-3, and B-4 (Notes and Security
Agreements).
9
See Document No. 21.
3
Claim.”10 Bancroft alternatively moves to dismiss the counterclaims
for failure to state a claim for which relief can be granted.
II.
A.
Motion to Dismiss for Improper Venue
Legal Standard
Rule 12(b)(3), which establishes a defense of improper venue,
may be used to seek dismissal based on a forum selection clause.
See FED. R. CIV . P. 12(b)(3); Lim v. Offshore Specialty Fabricators,
Inc., 404 F.3d 898, 902 (5th Cir. 2005).11
Federal law governs the
determination of the enforceability of a forum selection clause for
diversity cases in federal court.
Haynsworth v. The Corporation,
121 F.3d 956, 962 (5th Cir. 1997).
Forum-selection clauses are
“prima facie valid and should be enforced unless enforcement is
shown
by
the
circumstances.”
resisting
party
to
be
unreasonable
under
the
M/S Bremen v. Zapata Off-Shore Co., 92 S. Ct.
1907, 1913 (1972) (internal quotation marks and citations omitted).
“Unreasonableness potentially exists where (1) the incorporation of
10
Document No. 39, ex. 4 at 16 ¶ XXVIII D (Jan. 1, 2010 Group
Policy St. Lucia forum selection clause provision).
11
See also Noble Drilling Servs., Inc. v. Certex USA, Inc.,
620 F.3d 469, 472 n.3 (5th Cir. 2010) (noting that the Fifth
Circuit “has not previously definitively decided whether Rule
12(b)(1) or Rule 12(b)(3) is the proper rule for motions to dismiss
based on an arbitration or forum-selection clause” but declining to
address the issue because, as here, the parties did not address it)
(citing Ambraco, Inc. v. Bossclip B.V., 570 F.3d 233, 238 n.1 (5th
Cir. 2009)).
4
the forum selection clause into the agreement was the product of
fraud or overreaching; (2) the party seeking to escape enforcement
‘will for all practical purposes be deprived of his day in court’
because of the grave inconvenience or unfairness of the selected
forum; (3) the fundamental unfairness of the chosen law will
deprive the plaintiff of a remedy; or (4) enforcement of the forum
selection clause would contravene a strong public policy of the
forum state.”
Haynsworth, 121 F.3d at 963.
“The party resisting
enforcement [of the forum selection clause] on these grounds bears
a ‘heavy burden of proof.’”
Id. (quoting The Bremen, 92 S. Ct. at
1917); accord Afram Carriers, Inc. v. Moeykens, 145 F.3d 298, 301
(5th Cir. 1998) (“The burden of proving unreasonableness is a heavy
one, carried only by a showing that the clause results from fraud
or overreaching, that it violates a strong public policy, or that
enforcement of the clause deprives the [resisting party] of his day
in court.” (citations omitted) (emphasis in original)).
B.
Discussion
Counter-Plaintiffs object to the Court’s enforcement of the
Saint Lucia forum selection clause for three reasons: (1) they
never agreed to the clause; (2) Bancroft waived the clause when it
brought the suit on the Notes in a court other than one in Saint
Lucia; and (3) the Saint Lucia clause is unreasonable.12
12
Document No. 49 at 5.
5
1.
Agreement to the Clause
“The Court first must determine whether Defendant agreed to
the clause before considering whether it is enforceable.”
Valero
Mktg & Supply Co. v. Baldwin Contracting Co., Inc., No. H-09-2957,
2010 WL 1068105, at *2 (S.D. Tex. Mar. 19, 2010).
The parties
dispute whether the amended Saint Lucia forum selection clause
found in the 2010 Group Policy was effectively incorporated into
their
agreement.
It
is
undisputed
that
Clay,
on
behalf
of
Ventures, signed the Application for Insurance agreeing to a forum
selection
clause
that
named
the
British
Virgin
Islands
and
warranting that Ventures understood that this insurance could not
be obtained in the United States.
The Application was an offer by
Ventures to buy insurance from Bancroft, who accepted by issuing a
Certificate of Insurance.13
The Certificate, issued annually for
each new coverage year, confirmed coverage under a Group Policy
which could be viewed pursuant to instructions on the Certificate.14
The
2010
Certificate,
bearing
at
the
top
of
the
front
page
13
See Document No. 21, ex. N § 2(i) (Application is not an
offer by Bancroft); id., ex. N § G(c) (“Coverage applied for
becomes effective only upon acceptance and approval of this
Application by the Association and the Insurer.
Upon such
acceptance the Certificate of Insurance will bear the Effective
Date as set forth on page one.”).
14
The Application, in its “Commonly Asked Questions” Section
which Clay initialed, provided: “Each year, a new Certificate of
Insurance will be provided with updated terms.” Id., ex. N at Page
48 of 59 Question (10).
6
Bancroft’s
name
and
address
in
“Castries,
Saint
Lucia,
West
Indies,” expressly states in regular font on its front page, that
“the Group Policy sets forth the terms and conditions of the
insurance provided.”15
By virtue of the Certificate, therefore,
Counter-Plaintiffs received constructive notice of the terms of the
Group Policy that governed their agreement with Bancroft.
See
Steel Warehouse Co., Inc. v. Abalone Shipping Ltd. of Nicosai, 141
F.3d 234, 237 (5th Cir. 1998) (holding that “proper incorporation
yields constructive notice” where the parties were sophisticated
and the document clearly referenced the charter party containing
the arbitration clause); see also TIG Ins. Co. v. Sedgwick James of
Washington, 184 F. Supp. 2d 591, 598 (S.D. Tex. 2001) (Atlas, J.)
(where the certificate of insurance referenced the policy, “the
holder of a certificate of insurance should obtain the insurance
policy to ascertain his coverage,” rejecting plaintiffs’ argument
15
Document No. 39, ex. 1. The 2010 Group Policy, containing
the above-stated Saint Lucia forum selection clause, was the policy
in effect when Counter-Plaintiffs filed their business loss claims
in October 2010. By 2010, Bancroft had amended its Group Policy to
remove the British Virgin Islands forum selection clause and to
substitute the Saint Lucia clause.
Thus, the British Virgin
Islands clause no longer applied. See, e.g., McAvey v. Lee, 260
F.3d 359, 364 (5th Cir. 2001) (holding that the insurance company’s
failure “to continue or re-adopt” an exclusion in the applicable
policy effectively deleted that provision and rendered it
inoperative); 29 WILLISTON ON CONTRACTS § 73:17 (4th ed. 2003) (“A
contract containing a term inconsistent with a term of an earlier
contract between the same parties is interpreted as including an
agreement to rescind the inconsistent term in the earlier
contract.”). The subject of the Court’s analysis, therefore, is
whether the 2010 Saint Lucia forum selection clause is enforceable.
7
that they never received the policy and therefore could rely solely
on the certificate of insurance).
There is no indication that Counter-Plaintiffs ever objected
to being bound by the Group Policy referenced and which was then
effective with the issuance of each year’s new Certificate.
“Any
act inconsistent with an intent to avoid a contract has the effect
of ratifying the contract.”
Missouri Pac. R. Co. v. Lely Dev.
Corp., 86 S.W.3d 787, 791 (Tex. App.-–Austin 2002, pet. dism’d).
In fact, Counter-Plaintiffs admit that they relied on the policy to
make five previous claims over their course of dealings with
Bancroft, all of which “Bancroft paid according to the terms of the
policy.”16
See Lely, 86 S.W.3d at 791 (“Ratification may be
inferred by a party’s course of conduct and need not be shown by
express word or deed.”).
Notwithstanding Counter-Plaintiffs’ contention that they never
signed a document agreeing to the amended terms in the Group
Policy, Counter-Plaintiffs filed their present claim for benefits
under the 2010 Group Policy now at issue.
Seeking benefits under
the 2010 Group Policy estops Counter-Plaintiffs from claiming that
they are not bound by its venue clause.
See Hellenic Investment
Fund, Inc. v. Det Norske Veritas, 464 F.3d 514, 517-18 (5th Cir.
2006) (“Direct-benefit estoppel ‘involve[s] non-signatories who,
during the life of the contract, have embraced the contract despite
16
Document No. 21 ¶ 85 (emphasis added).
8
their non-signatory status but then during litigation, attempt to
repudiate
the
arbitration
clause
in
the
contract.’”
(quoting
E.I. DuPont de Nemours & Co. v. Rhone Poulenc Fiber & Resin
Intermediates, S.A.S., 269 F.3d 187, 200 (3d Cir. 2001))); In re
Kellogg Brown & Root, Inc., 166 S.W.3d 732, 739 (Tex. 2005) (“Under
‘direct benefits estoppel,’ a non-signatory plaintiff seeking the
benefits of a contract is estopped from simultaneously attempting
to
avoid
the
contract’s
burdens,
such
as
the
obligation
to
arbitrate disputes.”).
Further, although Counter-Plaintiffs maintain that they never
saw the policy, they do not contend that Bancroft prevented them
from seeing it, nor do they claim that they ever sought to read it.
Failure
to
read
a
policy
does
conditions and other provisions.
not
excuse
a
party
from
its
See, e.g., Shindler v. Mid-
Continent Life Ins. Co., 768 S.W.2d 331, 334 (Tex. App.–-Houston
[14th Dist.] 1989, no writ) (“An insured will be deemed to know the
contents of the contract he makes.” (citing Standard Accident Ins.
Co. v. Employers Cas. Co., 419 S.W.2d 429, 432 (Tex. Civ. App.-Dallas 1967, writ ref’d n.r.e.))); see also Proctor v. Southland
Life Ins. Co., 522 S.W.2d 261, 265 (Tex. Civ. App.-–Fort Worth
1975, writ ref’d n.r.e.) (rejecting plaintiff’s contention that,
because he left the policy with his agent, his ignorance of its
terms was excused); In re Int’l Profit Assocs., Inc., 286 S.W.3d
921, 924 (Tex. 2009) (“Simply being unaware of a forum-selection
9
clause does not make it invalid.”). Counter-Plaintiffs were issued
a Certificate confirming coverage under terms and conditions set
forth in a Group Policy, were instructed how to access the Policy,
and admittedly filed claims “under the terms of the policy”; they
are therefore estopped from claiming that they did not agree to the
forum selection clause contained therein.
2.
No Waiver
Counter-Plaintiffs also contend that Bancroft waived the Saint
Lucia forum selection clause by filing the instant action to
collect on the Notes in a forum other than Saint Lucia.
“Waiver is
generally understood to be the intentional relinquishment of a
known existing legal right.”
N. Am. Specialty Ins. Co. v. Debis
Fin. Servs., Inc., 513 F.3d 466, 470 (5th Cir. 2007) (quotation
omitted).
“For waiver to occur, there must be an existing right,
knowledge of its existence, and either an actual intention to
relinquish that right or conduct so inconsistent with the intent to
enforce the right as to induce a reasonable belief that it has been
relinquished.”
selection
Id.
clause
The 2010 Group Policy’s Saint Lucia forum
contains
a
specific
exception,
namely,
that
“[t]his forum selection provision shall not apply to an action
brought by the Company to enforce the terms of any loan made by the
Company
17
to
a
Certificate
Holder.”17
The
Notes
Document No. 39, ex. 4 at 16 ¶ XXVIII D.
10
and
Security
Agreements expressly provide that they are governed by Texas law.18
Given the carved-out exception in the Saint Lucia forum selection
clause for suits brought by Bancroft on loans, and the parties’
agreements
that
Texas
law
applies
to
the
notes
and
security
agreements, Bancroft’s filing in the United States of this suit on
the loans does not constitute a waiver by Bancroft of the Saint
Lucia forum selection clause for suits arising from or related to
the Policy or claims made under the Policy.
Nor is there merit to Counter-Plaintiffs’ argument that their
claims
to
enforce
the
benefits
of
the
insurance
policy
are
compulsory counterclaims and therefore must be brought in this
Court.
Assuming without deciding that Counter-Plaintiffs’ Policy
claims fall within the ambit of Rule 13(a) because they “arise[]
out of the transaction or occurrence that is the subject matter of
the opposing party’s claim,” FED . R. CIV . P. 13(a)(1)(A), the Court
may not ignore the forum-selection clause.
See e.g., Publicis
Commc’n v. True North Comm’cns Inc., 132 F.3d 363, 365 (7th Cir.
1997) (Easterbrook, J.) (holding that counterclaims subject to a
forum selection clause must be brought in the specified forum and
are
not
susceptible
to
preclusion
compulsory counterclaims).
for
not
being
brought
as
In other words, the forum selection
clause precludes Bancroft from later claiming that the Counter-
18
Document No. 1, exs. A-1 ¶ 11, A-2 ¶ 11, A-3 ¶ 11, A-4 ¶ 11,
B-1 ¶ 6.01, B-2 ¶ 6.01, B-3 ¶ 6.01, and B-4 ¶ 6.01.
11
Plaintiffs may not assert their insurance claims in Saint Lucia.
See id. at 366 (“If the parties promise to litigate a dispute only
in a particular forum, a party to the contract cannot seek to bar
the litigation in that forum because the claim was not presented in
some other forum.”).
Counter-Plaintiffs have made no showing that
courts in Saint Lucia, which is an independent member state of the
British Commonwealth and recognizes Queen Elizabeth II as head of
state, and which has a judicial system that applies English common
law, with final appeal to the Privy Council in London, would not
respect the foregoing principle.
3.
Forum Selection Clause Is Not Unreasonable
Counter-Plaintiffs argue that the forum selection clause is
unreasonable
because:
(1)
it
is
the
product
of
fraud
or
overreaching; (2) a jury trial is not available in Saint Lucia and
thus Counter-Plaintiffs will be deprived of their day in court; and
(3) enforcing the forum selection clause would be against Texas
public policy.
First, Counter-Plaintiffs’ fraud argument centers on Bancroft
at some point between 2005 and 2008, amending the Group Policy to
designate Saint Lucia as the exclusive forum for litigation in
place of the British Virgin Islands, allegedly without notice to
Cross-Plaintiffs. As already observed, Counter-Plaintiffs from the
beginning of their relationship with Bancroft well knew that they
12
were dealing with a Caribbean entity--shown on the 2005 insurance
application with an address in British Virgin Islands, and on
Certificates
of
Insurance
beginning
in
2006
and
each
year
afterwards with an address in Saint Lucia, West Indies--to purchase
an insurance product that was not available in the United States
and that Bancroft could not sell or offer to sell in the United
States.
The insureds knew that if Bancroft accepted Counter-
Plaintiffs’ application for its offshore insurance product, that
Counter-Plaintiffs would be required to seek redress for insurance
claim disputes in a foreign jurisdiction, initially the British
Virgin Islands. Counter-Plaintiffs also knew that in order to read
the
entirety
of
the
Group
Policy
referenced
in
each
annual
Certificate of Insurance, they would need to do so in the British
Virgin Islands through the 2009 Policy year, and then, pursuant to
the 2010 Certificate of Insurance, they would find that year’s
Group Policy available for review in Saint Lucia.
Thus, when
Counter-Plaintiffs received their Certificate of Insurance dated
December 31, 2009, for the year 2010, they had notice that Bancroft
was then located in Castries, Saint Lucia, West Indies (its address
since 2006), that the Group Policy “sets forth the terms and
conditions of the insurance provided,” and that the Group Policy
may be reviewed by written request and appointment in Saint Lucia.
The amendment to the Group Policy, to require that litigation
related to the Policy be brought in Saint Lucia rather than the
13
British
Virgin
Islands,
was
available
for
Counter-Plaintiffs’
inspection along with the rest of the Group Policy if they had
chosen to view the same.
These are sophisticated parties--a
foreign insurance company steering clear of American law and
selling products not obtainable in the United States, and large
pay-day loan entities acquiring millions of dollars of business
insurance, available only abroad, in order to achieve certain
business and federal income tax objectives in the United States.
Richard Clay, President of the General Partner of the payday loan
applicants,
agreed
and
expressly
warranted
in
the
insurance
application that the applicant is “a sophisticated person with a
substantial net worth in excess of USD $1,000,000,” and that
applicant “has the same level of sophistication as an accredited
investor would have for securities purposes.”
The facts presented
here are not properly characterized as fraud such as to render the
forum selection clause unenforceable. See, e.g., The Bremen, 92 S.
Ct. at 1914 (finding that the forum selection clause was “made in
an
arm’s-length
negotiation
by
experienced
and
sophisticated
businessmen” and that “it should be honored by the parties and
enforced by the courts”).
Counter-Plaintiffs also claim that they were fraudulently
induced to form the contract as a whole, but the Supreme Court has
held that the forum selection clause itself must be the product of
fraud or overreaching in order for it to be unenforceable.
14
Scherk
v. Alberto-Culver Co., 94 S. Ct. 2449, 2457 n.14 (1974) (“This
[fraud] qualification does not mean that any time a dispute arising
out of a transaction is based on an allegation of fraud, as in this
case, the clause is unenforceable.
Rather, it means that [a] . . .
forum selection clause in a contract is not enforceable if the
inclusion of that clause in the contract was the product of fraud
or coercion.” (emphasis in original)); see also Afram, 145 F.3d at
301-02 (“Were we to judge the soundness of the forum-selection
clause by what we believe to be the merits of the underlying
contract, we would subvert the aforementioned comity concerns by
making a merits inquiry that the Supreme Court has determined is
best left to the forum selected by the parties.”).
Counter-Plaintiffs’ second argument is that litigating in
Saint Lucia would “effectively deprive them of their day in court.”
This is not persuasive.
American
courts
to
“The Supreme Court has . . . instructed
enforce
[forum-selection]
clauses
in
the
interests of international comity and out of deference to the
integrity and proficiency of foreign courts.”
Inc.
v.
Mira
M/V,
111
F.3d
33,
35
(5th
Mitsui & Co. (USA),
Cir.
1997)
(citing
Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 105 S.
Ct. 3346, 3355 (1985)).
Moreover, the necessity of traveling to a
remote forum does not preclude the enforcement of a forum selection
clause.
See Pugh v. Arrow Electronics, Inc., 304 F. Supp. 2d 890,
15
895 (N.D. Tex. 2003) (Solis, J.) (citing Carron v. Holland, 51 F.
Supp. 2d 322, 326 (E.D.N.Y. 1999)).
Similarly unavailing is Counter-Plaintiffs’ argument that the
lack of a provision for a jury trial makes enforcement of the forum
selection clause unjust in this case.
See, e.g., Interam. Trade
Corp. v. Companhia Fabricadora de Pecas, 973 F.2d 487 (6th Cir.
1992) (enforcing a Brazil forum selection clause because plaintiff
would not be deprived of his day in court even though he would have
no right to a jury trial in Brazil); Alt. Delivery Solutions, Inc.
v. R.R. Donnelley & Sons Co., No. Civ. SA05CA0172-XR, 2005 WL
1862631,
at
*12-13
(W.D.
Tex.
July
8,
2005)
(Rodriguez,
J.)
(holding a forum selection clause enforceable even though a Mexico
forum would not allow the case to be tried by a jury).
In
Alternative Delivery Solutions, the court explained:
To invalidate all forum selection clauses that designate
forums that do not provide for a jury trial would
implicate many of the comity concerns raised by the
Supreme Court in The Bremen and other cases concerning
international agreements. Further, Plaintiff’s argument
that being deprived of its right to jury trial will “for
all practical purposes . . . prevent [plaintiff] from
having its day in court” is wholly unconvincing, for such
a conclusion would presumptively invalidate all bench
trials and arbitration clauses.
2005 WL 1862631, at *12.
Other Circuits have also held that a lack
of jury trials does not render a forum inadequate. See, e.g.,
Rivera v. Centro Medico de Turabo, Inc., 575 F.3d 10, 23–24 (1st
16
Cir. 2009); Interamerican Trade Corp., 973 F.2d at 489 (6th Cir.
1992); Lockman Found. v. Evangelical Alliance Mission, 930 F.2d
764, 768 (9th Cir. 1991); In re Union Carbide Corp. Gas Plant
Disaster at Bhopal, India in Dec., 1984, 809 F.2d 195, 199 (2d Cir.
1987) cert. denied, 108 S. Ct. 199 (1987).
Moreover, the Fifth
Circuit has observed that the Supreme Court has “roundly rejected
the notion that a forum selection clause can be circumvented by a
party’s
asserting
the
unavailability
of
American
remedies.”
Haynsworth, 121 F.3d at 967 (citing Scherk, 94 S. Ct. at 2456-57).
Finally, Counter-Plaintiffs’ argument that enforcing the forum
selection clause would be contrary to Texas public policy, as
expressed in the Texas Insurance Code, lacks merit.
Counter-
Plaintiffs expressly agreed to litigate insurance matters in a nonTexas forum and that the insurance they were buying could not be
obtained in the United States; hence Counter-Plaintiffs’ refuge in
the Texas Insurance Code is ineffectual.
The Fifth Circuit in
Haynsworth stated:
It defies reason to suggest that a plaintiff may
circumvent forum selection and arbitration clauses merely
by stating claims under laws not recognized by the forum
selected in the agreement. A plaintiff simply would have
to allege violations of his country’s tort law or his
country’s statutory law or his country’s property law in
order to render nugatory any forum selection clause that
implicitly or explicitly required the application of the
law of another jurisdiction.
17
121 F.3d at 969 (quoting Roby v. Corporation of Lloyd’s, 996 F.2d
1353 (2d Cir. 1993) (emphasis in original)).
In sum, Counter-
Plaintiffs have not “advanced a sound rationale to overcome the
presumption that federal courts ‘must enforce forum selection
clauses in international transactions.’”
Hellenic Inv. Fund, 464
F.3d at 520 (quoting Haynsworth, 121 F.3d at 962).
Therefore,
Counter-Plaintiffs have failed to meet their heavy burden of
persuasion to show that the Saint Lucia forum selection clause is
unreasonable under the circumstances shown here.
For the foregoing reasons, the first eight counterclaims, and
part of the ninth counterclaim, must be dismissed for improper
venue because they arise from or relate to the insurance contract
or claims made thereunder, to wit:
coverage for claims submitted
(Count I), return of insurance premium (Count II); conversion of
the
insurance
reserves
(Count
III);
fraudulent
inducement
to
purchase the “Premium Lite” insurance product (Count IV); breach of
fiduciary duty for investing insurance premium money entrusted to
Bancroft (Count V); unjust enrichment of insurance premiums (Count
VI); demand for an accounting, which is dependent on the breach of
fiduciary duty claim (Count VII); rescission of the insurance
agreement (Count VIII); and that portion of Count IX, seeking
declaratory judgment that Bancroft has “sufficient reserves in its
premium account to offset the amounts purportedly due.”
18
The
remaining portion of Count IX, seeking declaratory judgment that
the notes are not due and owing, and that FFD III owes no money on
the notes, will also be dismissed without prejudice because the
counterclaim adds nothing to the lawsuit and merely states CrossPlaintiffs’ denial of liability in answer to Bancroft’s suit on the
notes.
Finally, Bancroft’s motion to dismiss Ventures’s claims is
GRANTED, inasmuch as only interest is in the insurance contract.19
III.
Order
Accordingly, for the foregoing reasons, it is
ORDERED that Counterclaim-Defendant Bancroft Life & Casualty
ICC, Ltd.’s Motion to Dismiss the Counterclaims (Document No. 39)
is GRANTED, Counts I-VIII and that portion of Count IX seeking a
declaration of rights under the insurance policy, are all DISMISSED
without prejudice for improper venue; that portion of Count IX
seeking
declaratory
judgment
that
Counter-Plaintiffs
have
no
liability on the notes is DISMISSED without prejudice as redundant
of FFD III’s Answer to Bancroft’s suit denying liability on the
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In view of the analysis made in this Memorandum, the Court
recognizes that it erred in its Order signed November 1, 2011,
which allowed FFD Ventures, LP to join in the counterclaim against
Bancroft.
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notes; and all counterclaims of FFD Ventures, LP are DISMISSED
without prejudice for improper venue.
The Clerk shall notify all parties and provide them with a
signed copy of this Order.
SIGNED at Houston, Texas, on this 21st day of June, 2012.
____________________________________
EWING WERLEIN, JR.
UNITED STATES DISTRICT JUDGE
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