Kenneth W. Liles v. Ginn-LA West End, Limited ( 2011 )

[PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________ FILED
U.S. COURT OF APPEALS
No. 10-11943 ELEVENTH CIRCUIT
________________________ JAN 28, 2011
JOHN LEY
CLERK
D.C. Docket No. 3:08-cv-01217-MMH-JRK
KENNETH W. LILES, PATRICIA M. LILES, EDWARD R. WEBB,
JAMES JOSEPHSON, WILLIAM J. ANDREWS, JR., MARK R. ROODVOETS,
JON D. ANDREWS, CHARLES B. LESESNE, JERRY A. CICOLANI, JR.,
KRIS BRENEMAN, DANA F. BALLINGER, SUSAN KHERKHER,
THOMAS E. LAMMERTSE, MARY L. SIPSKI, RONALD P. VAN, as trustee
of the Ronald P. Van Jr. Revocable Trust,
KATHY JO VAN, as trustee of the Kathy Jo Van Revocable Trust,
lllllllllllllllllllll Plaintiffs - Appellants,
versus
GINN-LA WEST END, LIMITED,
ROBERT F. MASTER, II,
EDWARD R. GINN, III
lllllllllllllllllllll Defendants - Appellees,
GINN FINANCIAL SERVICES, et al.,
Defendants.
llllllllllllllllllll
________________________
Appeal from the United States District Court
for the Middle District of Florida
________________________
(January 28, 2011)
Before TJOFLAT, CARNES and HILL, Circuit Judges.
PER CURIAM:
This appeal involves the interaction of the specific terms in a series of land
purchase contracts and the anti-waiver and venue provisions of the Interstate Land
Sales Full Disclosure Act, 15 U.S.C. § 1701 et seq. (“ILSA”). The plaintiffs,
individually and collectively, purchased undeveloped land in the proposed
Versailles Sur Mer subdivision on Grand Bahamas Island from Ginn-La West End,
Ltd. (“Ginn-La”), a Bahamas corporation with its principal place of business in
Florida. Before the district court, the plaintiffs sought rescission of those purchase
contracts and damages, all pursuant to ILSA, as well as common law relief,
claiming that Ginn-La and its principals had either failed to disclose or
affirmatively concealed material facts relating to the individual properties’ titles
and the likelihood of the subdivision’s completion.
2
The defendants moved the district court to dismiss the plaintiffs’ complaint1
pursuant to Federal Rules of Civil Procedure 12(b)(3), for improper venue, and
12(b)(6), for failure to state a claim for which relief may be granted. At the core of
the defendants’ motion to dismiss was a paragraph in the purchase contracts
containing a forum-selection clause designating the Bahamas as the exclusive
venue for any litigation “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,” and a choice
of law provision identifying Bahamian law as controlling.
The district court considered the forum-selection clause, found venue was
foreclosed in the Middle District of Florida, and granted the appellees’ motion
pursuant to Federal Rule of Civil Procedure 12(b)(3).2 The plaintiffs appeal the
district court’s ruling. Their principal contention is that the district court’s
enforcement of the forum selection clause deprived them of their right to chose the
venue for their ILSA claims and is contrary to public policy as announced in M/S
Bremen v. M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 92 S. Ct. 1907, 32 L.
Ed. 2d 513 (1972), and Lipcon v. Underwriters at Lloyd’s, London, 148 F.3d 12831
We refer to the amended complaint as the complaint.
2
The district court’s order, Liles v. Ginn-La West End, Ltd., No. 3:08-cv-1217-MMH-
JRK (M.D. Fla. March 30, 2010), is unpublished.
3
(11th Cir. 1998). We disagree and therefore affirm the court’s judgment for the
reasons stated in its dispositive order, which is annexed as an Appendix.
AFFIRMED.
4
APPENDIX
ORDER
THIS CAUSE is before the Court on Defendants Ginn-La West End, Limited, Ginn
Financial Services, Robert F. Masters II, and Edward R. Ginn, Ill's (collectively Ginn
Defendants2) Motion to Dismiss Plaintiffs' Second Amended Complaint and Incorporated
Memorandum of Law in Support (Doc. No. 77; Motion), filed on August 17, 2009. On July
29, 2009, Plaintiffs filed an eleven-count Second Amended Complaint andJDemand for Jury
Trial (Doc. No. 71; Complaint). Plaintiffs' claims stem from their respective contracts to
purchase undeveloped parcels of real property in the Versailles Sur Mer subdivision on
Grand Bahama Island (VSM subdivision) from Defendant Ginn-La West End, Limited (Ginn-
La), a Bahamian Corporation with its principal place of business in Florida. Complaint
at 2-5; see also Contracts, attached as Exhibits C-K to Complaint. In counts one through
2 Although the Court recognizes that Plaintiffs have asserted only one claim against
Defendant Ginn Financial Services, for simplicity, unless otherwise noted, the Court refers collectively
to Defendants as the "Ginn Defendants."
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three and five through seven of the Complaint, all Plaintiffs assert claims under the Interstate
Land Sales Full Disclosure Act, 15 U.S.C. § 1701 etg. (ILSA) against all Ginn Defendants
except Defendant Ginn Financial Services (Ginn Financial).3 In count four, all Plaintiffs
except Plaintiffs Thomas E. Lammertse and Mary L. Sipski assert an ILSA claim against all
Ginn Defendants except for Ginn Financial. In count eight, Plaintiff Dana L. Ballinger
(Ballinger) asserts an ILSA claim against all Ginn Defendants except for Ginn Financial. In
count nine, Plaintiffs Ballinger and James Josephson (Josephson) assert an ILSA claim
against all Ginn Defendants except Ginn Financial. Finally, in count ten, all Plaintiffs assert
a claim for conspiracy to defraud against all Ginn Defendants.4 In the instant Motion, the
Ginn Defendants move to dismiss all claims against them. The Ginn Defendants first seek
dismissal of the Complaint for improper venue under Rule 12(b)(3), Federal Rules of Civil
Procedure (Rule(s)), arguing that the Plaintiffs' contracts contain enforceable forum-selection
clauses designating the exclusive venue for the instant litigation to be in the Bahamas.
Motion at 5-8. Alternatively, the Ginn Defendants argue that one or more of Plaintiffs' claims
ILSA "is a consumer protection statute that 'was intended to curb abuses accompanying
interstate land sales." Stein v. Paradigm Mirasol, LLC, 586 F.3d 849, 853 (11th Cir. 2009). It is a
comprehensive statute with an elaborate scheme of accompanying regulations. 15 U.S.C. § 170124 C.F.R. § 1710 Utilizing "'disclosure as its primary tool' to discourage fraud[,J" ILSA
"requires developers selling or leasing property to provide the purchaser with a property report before
the sales contract is signed. If the developer fails to provide a property report, the purchaser generally
has the right to revoke the contract." Stein, 586 F.3d at 853 (internal citations omitted). In addition to
the specific disclosure regulations pertaining to the property report, ILSA "also contains a general anti-
fraud provision that makes it illegal to obtain money or property in connection with a development by
means of a material false statement or any omission of a material fact necessary to make the statements
made not misleading." Rice v. Branigar OrQ., Inc., 922 F.2d 788, 791 n.4 (11th Cir. 1991) (citation
omitted).
Plaintiffs previously asserted one or more claims against Defendants Stewart Title
Guaranty Company, Picket Fence Realty, and Simon L. Conway, but all such claims have been resolved.
SeeDoc. Nos. 130, 142, 186.
2
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should be dismissed under Rule 12(b)(6) for failure to state a claim entitling them to relief,
that one or more of Plaintiffs' claims sound in fraud but are not plead with particularity as
required by Rule 9(b), and that Plaintiffs contractually released all Ginn Defendants except
Ginn-La from liability, Motion at 8-25. Plaintiffs oppose all of the requested for relief set
forth in the Motion, see Plaintiffs' Opposition to Motion to Dismiss Filed by Ginn-La West
End, Limited; Ginn Financial Services; Stewart Title Guaranty Company; Robert F. Masters,
II; and Edward R. Ginn, Ill (Doc. No. 78; Response), and have filed numerous declarations
in support of their position, see Doc. Nos. 7994,5 Thus, the issues in the Motion are now
fully briefed and ripe for resolution. Because the venue issue is dispositive, the Court need
not address the Ginn Defendants' remaining arguments for dismissal.
I. Background6
Ginn-La engaged in the development and sale of lots in the VSM subdivision. .
Complaint at 5,7 Plaintiffs reside in various states throughout the United States. ki. at
2-4. Between 2006 and 2007 Plaintiffs purchased lots within the VSM subdivision from Ginn-
Unlike with a Rule 12(b)(6) motion to dismiss, the Court may consider materials outside
the pleadings without converting a Rule 1 2(b)(3) motion to dismiss to a motion for summary judgment.
See Rule 12(d); see also Sucampo Pharms., Inc. v. Astellas Pharma, Inc., 471 F.3d 544,549-50(4th Cir.
2006); Argueta v. Banco Mexicano, S.A., 87 F.3d 320, 324 (9th Cir. 1996); National Numismatic
Certification, LLC. v. eBay, Inc., No. 6:08-cv-42-Orl-19GJK, 2008 WL 2704404, at *8 (M.D. Fla. July 8,
2008); Ford v. Supreme Court of Fla., No. 6:06-cv-3-Orl-31JGG, 2006 WL 1382075, at *4 n.8 (M.D. Fla.
May 18, 2006).
6 Because the Court resolves the instant Motion on the basis of a forum-selection clause
designating venue exclusively in the Bahamas, the Court need not extensively recite the substantive facts
of the case.
Defendant Robert F. Masters II (Masters) is Ginn-La's President, and Defendant Edward
R. Ginn Ill (Bobby Ginn) is its Chairman. id. at 5-6.
3
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La.8 Paragraph twenty-two of each sales contract contains an identical forum-selection
clause purporting to designate the Bahamas as the exclusive venue for any 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." See Contracts, attached as Exhibits C-K to Complaint, at ¶ 22. The
enforceability and applicability of this forum-selection clause dictates whether venue is
proper in this Court.
II. Applicable Law
"Motions to dismiss upon the basis of choice-of-forum and choice-of-law clauses" that
purport to require litigation in a foreign county are properly analyzed as motions to dismiss
for improper venue under Rule 12(b)(3). Lipcon v. Underwriters at Lloyd's, London, 148
F.3d 1285, 1290 (11th Cir. 1998); see also Hollis v. Fla, State Univ., 259 F.3d 1295, 1300
n.5 (11th Cir. 2001). "Because '[w]e cannot have trade and commerce in world markets and
international waters exclusively on our terms, governed by our laws, and resolved in our
courts," the Eleventh Circuit Court of Appeals has recognized that "forum-selection and
choice-of-law clauses 'are presumptively valid where the underlying transaction is
fundamentally international in character." Lipcon, 148 F.3d at 1291, 1295 (quotations
omitted). The party seeking to avoid the forum-selection clause bears "a heavy burden of
proof." M/S Bremenv. Zapata Off-Shore Co., 407 U.S. 1,17, 19 (1972). Nevertheless, this
8 Some Plaintiffs purchased lots individually, while others did so together. For example,
Plaintiff James Josephson individually purchased lot 493 in the VSM subdivision. Complaint at 3,
24-25, Plaintiffs William J. Andrews, Jr., Mark R. Roodvoets, Jon D. Andrews, and Charles B. Lesesne
collectively purchased lot 272. J at 3, 25.
4
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presumption of validity may be overcome "by a clear showing that the clauses are
unreasonable under the circumstances." Lipcon, 148 F.3d at 1295 (quotation and internal
quotation marks omitted). As such, forum-selection clauses are unenforceable as
"unreasonable under the circumstances" only where:
(1) their formation was induced by fraud or overreaching; (2) the plaintiff
effectively would be deprived of its day in court because of the inconvenience
or unfairness of the chosen forum; (3) the fundamental unfairness of the
chosen law would deprive the plaintiff of a remedy; or (4) enforcement of such
provisions would contravene a strong public policy.
ki. at 1296 (citation omitted). Developed from the Supreme Court's decision in Bremen, this
four-factored framework for determining whether a choice clause is unenforceable is known
as "the Bremen test" See Lipcon, 148 F3d at 1292, 1295-96.
Ill. Analysis
1. The forum-selection clauses are enforceable
At the outset, the Court finds that the contracts and underlying transactions in this
case are "truly" and "fundamentally" international. Seeki at 1293 & n.14, 1295. Plaintiffs,
the buyers in the respective contracts, are all American residents, see Complaint at 2-4,
whereas Defendant Ginn-La, the seller in each contract, is a Bahamian corporation,
at 5, 24-27; see also Contracts, attached as Exhibits C-K to Complaint. The contracts were
negotiated in the United States, but the closings apparently took place partially in the United
States and partially in the Bahamas. Complaint at 23. Finally, and perhaps most
importantly, the subject matter of the contracts each concerns the sale of real property in the
Bahamas. See at 2-4. Accordingly, the contracts are truly international, and the
5
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enforceability of the choice clauses therein is governed by the Bremen test. Lipcon, 148
F.3d at 1293 n.14 (finding it "clear that the agreement in this case is 'truly international,"
where 'the parties to the agreement are from different countries, the negotiations leading up
to the agreement took place in the United States whereas the closing took place in England,
and the subject matter of the transaction concerned investment in an international insurance
market").
Plaintiffs in this case argue that the forum-selection clauses are unreasonable under
three of the four Bremen factors-specifically, that the clauses are the product of fraud and
overreaching, that they will deprive Plaintiffs of a full and fair hearing of their ILSA claims,9
and that they contravene the strong public policy articulated in ILSA, . Response at 2-
12. The Court addresses these arguments in turn. However, before applying the Bremen
factors, the Court briefly considers whether the forum-selection clauses at issue are
negotiated or non-negotiated, and also addresses the contractual specifications as to the
governing law.
The analysis with respect to whether a forum-selection clause is enforceable varies
slightly depending on whether the clause was negotiated or non-negotiated. Carnival
Cruise Lines, Inc. v. Shute, 499 U.S. 585, 592-93 (1991) (contrasting analysis of negotiated
forum-selection clause with non-negotiated forum-selection clause). Although the same
general analysis applies-both negotiated and non-negotiated forum-selection clauses are
presumptively valid and will be invalidated only upon a strong showing that one of the four
t is unclear to the Court whether this argument is tailored to the second or third Bremen
factor.
6
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factors in the Brernen test makes the clause at issue unreasonable-with respect to non-
negotiated forum-selection clauses, courts consider "whether the clause was reasonably
communicated to the consumer" by employing a "two-part test of 'reasonable
communicativeness[,]" which "takes into account the clause's physical characteristics and
whether the plaintiffs had the ability to become meaningfully informed of the clause and to
reject its terms." Krenkel v. Kerzner Int'l Hotels Ltd., 579 F.3d 1279, 1281 (11th Cir. 2009)
(per curiam),
The Court finds that the contracts at issue were freely negotiated and that the
traditional Bremen test applies. Although the forum-selection clauses, and indeed the entire
contracts, are nearly identical, there is no indication from Plaintiffs that they were not the
product of free negotiation. In contrast to the terms of a cruise ticket forced upon a
consumer with limited bargaining power, see Shute, 499 U.S. at 593, the instant contracts
concerned sophisticated real estate transactions involving large sums of money-Plaintiffs'
purchase prices ranged from $525,900 (Van) to $1,370,900 (Webb). Muzumdar v.
Wellness Int'l Network, Ltd., 438 F.3d 759, 762 (7th Cir. 2006) (distinguishing Shute and
rejecting contention that contract was one of adhesion, noting that "[t]he appellants were
parties to a somewhat sophisticated business deal" and finding it "hard to conclude that they
would have signed a contract worth more than $100,000 without considering its provisions").
Indeed, the Webb contract contains alterations-seemingly favorable to the buyer-that
eliminate one provision of the contract and add others. Webb Contract, attached as
Exhibit D to Complaint at 2, 18, 22.
7
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In the alternative, even if the forum-selection clauses were non-negotiated, the Court
would find the "two-part test of 'reasonable communicativeness" satisfied. The forum-
selection clause in each contract is not hidden; is set apart in a separate paragraph
preceded by the all-caps heading "GOVERNING LAW; VENUE"; and is set forth in the same
size and font as the surrounding paragraphs. See e.g. Webb Contract at 14; see also
Krenkel, 579 F.3d at 1281-82. Additionally, the contracts contain an all-caps provision
advising the buyer to read the contract carefully and consult an attorney prior to signing it,
and another all-caps provision advises the buyer to carefully review all terms, conditions,
provisions, disclaimers, and disclosures in the contract. See e.g. Webb Contract at 9, 18.
Accordingly, the Court rejects Plaintiffs' suggestion that the forum-selection clauses are
unenforceable based on the contention that they were not conspicuously set forth in the
contracts or "distinguished or set off from the surrounding paragraphs in any way."
Response at 5.
Forum-selection clauses are often, but not always, designed to specify not only the
site, but also the applicable law, for a given dispute. Lipcon, 148 F.3d at 1291-92 (citing
Bremen, 407 U.S. at 14 n.15); see also Scherkv. Alberto-CulverCo., 417 U.S. 506,519 n.13
(1974). In the instant action, in conjunction with designating the Bahamas as the forum for
any litigation, the parties agreed that Bahamian law would "govern the interpretation,
application, enforcement, performance of, and any other matter related to" each contract.
See Contracts, attached as Exhibits C-K to Complaint, at ¶ 22. Nevertheless, the contracts
explicitly incorporate, and confer on Plaintiffs, ILSA-based rescission rights under United
8
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States law. Specifically, each contract contains the following 'HUD DISCLOSURE'
immediately above the signature line:
YOU HAVE THE OPTION TO CANCEL THIS CONTRACT BY NOTICE TO
SELLER UNTIL MIDNIGHT OF THE SEVENTH DAY FOLLOWING THE
SIGNING OF THIS CONTRACT.
IF YOU DID NOT RECEIVE A PROPERTY REPORT PREPARED
PURSUANT TO THE RULES AND REGULATIONS OF THE OFFICE OF
INTERSTATE LAND SALES REGISTRATION, U.S. DEPARTMENT OF
HOUSING AND URBAN DEVELOPMENT, IN ADVANCE OF SIGNING THIS
CONTRACT, THIS CONTRACT MAY BE REVOKED AT YOUR OPTION
FOR TWO YEARS FROM THE DATE OF SIGNING.
at 19, unnumbered paragraph. In accordance with this HUD disclosure, each Plaintiff
received a Property Report prior to signing the applicable contract.1° The cover page of each
Property Report advises that "United States Federal law requires that you receive this Report
prior to your signing a contract or agreement to buy or lease a Lot (defined below) in this
Subdivision." Thus, although the contracts specify application of Bahamian law, they also
expressly invoke ILSA-based United States law and confer corresponding ILSA benefits and
rights on Plaintiffs. In sum, irrespective of the venue and choice of law provisions, there is
no dispute that the contracts incorporate ILSA disclosure rights and remedies. Motion
at 8 n.3 (acknowledging that "[t}he venue provision merely states a venue; it does not waive
compliance with ILSA"). The question requiring the Court's resolution is whether the forum-
10 Two separate Property Reports were prepared for the VSM subdivision, one dated June
28, 2006, the other September 12, 2006. Complaint at 40. Some of the Plaintiffs received the first
Property Report, and others received the latter. The two versions of the Property Report do not differ
materially with respect to any issue of consequence in the instant Motion.
9
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selection clauses, purporting to mandate that the venue for Plaintiffs' ILSA claims be
confined exclusively to the Bahamas, are enforceable.
Turning to the Bremen factors, Plaintiffs first argue that the forum-selection clauses
were the product of fraud and overreaching. Jat2-7.11 Given the specific contractual
incorporation of United States ILSA rights through the HUD Disclosures and corresponding
Property Reports, were the Ginn Defendants seeking to rely on the choice of law provision
to apply only Bahamian law to the exclusion of ILSA, the Court might agree. But this is not
the case. As previously discussed, the Ginn Defendants do not rely on the choice clauses
to dispute ILSA's applicability to Plaintiffs' claims in the action at bar. They merely contend
that the contracts designate the exclusive venue for Plaintiffs to bring any claim, including
one seeking to enforce ILSA rights, as the Bahamas. Thus, the Court rejects Plaintiffs'
characterization of the inclusion of both the HUD Disclosure and the choice clauses as a
"gotcha" tactic designed to mislead the Plaintiffs into believing they were protected by ILSA's
rescission rights while at the same time precluding application of those rights through the
exclusive application of Bahamian law. Accordingly, the Court determines that Plaintiffs
have not made a "clear showing" that the forum-selection clauses should be set aside as the
product of fraud or overreaching. See Licon, 148 F.3d at 129596.12
To be unenforceable, the inclusion of the choice clause itself must be the product of
fraud-more general claims of fraud will not defeat a choice clause and are properly litigated in
accordance with the parties' contractually chosen forum. See Lipcon, 148 F.3 at 1296.
12 Although the tension between Bahamian law and the contractual invocation of ILSA is
Plaintiffs' primary argument for finding the forum-selection clause fraudulent and unenforceable, Plaintiffs
have also set forth several additional arguments.
First, Plaintiffs argue that the Property Reports did not disclose that legal action would be
(continued
10
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Plaintiffs next argue that because "U.S. courts are uniquely positioned to adjudicate
ILSA claims[,}" if Plaintiffs are forced to bring ILSA-related claims in the Bahamas they will
be "sorely prejudiced and effectively deprived of the opportunity for a full and fair hearing of
those claims." , Response at 8. It is unclear whether Plaintiffs aim this argument toward
the second or third Bremen factor. Indeed, Plaintiffs argue neither that the chosen forum
would deprive them of their day in court due to the unfairness or inconvenience of a
Bahamian forum, nor that the applicable law would deprive them of a remedy. Lipcon,
12(
..continued)
required to be taken in the Bahamas, contrary to the disclosure requirements of 24 C.F.R. §
1710.116(e)(2). See Response at 6. Whatever merit this argument may have as to the validity of the
Property Reports, given that the forum-selection clauses were conspicuously set forth in the contracts
themselves, the Court declines to find that such an omission in the Property Reports clearly shows that
the contractual forum-selection clauses were procured by fraud. Lipcon, 148 F.3 at 1296
(recognizing that to be unenforceable, the inclusion of the choice clause itself must be the product of
fraud).
Second, Plaintiffs argue that all Plaintiffs other than Ronald P. Van and Kathy Jo Van executed
mortgage notes with Defendant Ginn Financial which include Florida choice-of-law and venue provisions,
and that the Ginn Entity that issued these notes, Bahamas Sales Associate LLC, has filed several federal
lawsuits in Florida against defaulting borrowers not parties to the instant case. Response at 6-7.
The Court does not consider this evidence of fraud, but will consider these arguments below when
addressing the issue of fundamental fairness.
Finally, the Court notes that in the Complaint, Plaintiffs set forth a series of conclusory and
unsubstantiated allegations purporting to demonstrate the forum-selection clauses are the product of
fraud and unenforceable. See Complaint at 27-30. For example, Plaintiffs allege that
[nJo Plaintiffs were ever informed or acknowledged that, upon information and belief,
Defendants GINN-LA and BOBBY GINN, alone or in conjunction with some other Ginn
entities, did make and continue to make gifts and contributions to the Bahamian
government and/or Bahamian officials, which gifts and contributions were and are
intended to induce the Bahamian government to offer concessions and cooperation in
connection with the development and operation of the VSM Subdivision
j at 29. They further allege that "upon information and belief, as a result of these same
commitments, gifts and contributions the GINN DEFENDANTS have also sought and obtained
favorable treatment from the Bahamian courts and/or court officials" and that "in light of the influence
exerted by the GINN DEFENDANTS over Bahamian courts and/or court officials. the Bahamian court
system would be an unfair forum" for Plaintiffs to bring their claims. at 30. Upon review, the
Court determines that many of the allegations are not indicative of any fraud, and none-all based on
information and belief-are sufficiently substantiated by fact. Sinaltrainal v. Coca-Cola Co., 578 F3d
1252, 1268 (11th Cir. 2009). Moreover, other than in connection with the arguments already discussed
above, Plaintiffs have not relied on or cited to any of these allegations in their Response in opposition
to the instant Motion. Accordingly, the Court finds any remaining fraud-based argument for avoiding the
forum-selection clauses to be inadequate and, in the alternative, waived.
11
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148 F.3d at 1296. Plaintiffs have not identified any differences between the law to be applied
domestically or in a Bahamian forum so as to make their remedies inadequate if they are
forced to litigate in the Bahamas. See generally Response. Indeed, the only rights Plaintiffs
contend are jeopardized by the forum selection clause are those pertaining to rescission and
venue under ILSA. Jat5-6. With respect to rescission rights, as previously noted, the
contracts incorporate ILSA disclosure obligations and rescission rights, and the Ginn
Defendants acknowledge that Plaintiffs have not waived their substantive rights under ILSA.
Thus, whether litigated in Florida or the Bahamas, the available remedies pertaining to
rescission are coextensive.
Moreover, the Court declines to find that a waiver of venue rights renders Plaintiffs'
remedies so inadequate as to make a Bahamian forum fundamentally unfair. Lipcon,
148 F.3d at 1297 ("We will not invalidate choice clauses. . . simply because the remedies
available in the contractually chosen forum are less favorable than those available in the
courts of the United States. Instead, we will declare unenforceable choice clauses only when
the remedies available in the chosen forum are so inadequate that enforcement would be
fundamentally unfair."). Rather than tailor their argument to either the second or third
Bremen factors, Plaintiffs, in a somewhat condescending manner, contend that Bahamian
courts are ill-equipped to adjudicate claims requiring "complex analyses of ILSA's
applicability and interpretation of ILSA's requirements." Response at 8. This parochial
sentiment, however, runs contrary to the international comity concern underlying Bremen.
. Lipcon, 148 F.3d at 1294; see also Scherk, 417 U.S. at 508, 519-20 (holding
12
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enforceable, in dispute arising from international commercial transaction, arbitration
agreement13 requiring disputes to be arbitrated in France applying laws of the state of
Illinois).14 Accordingly, the Court finds that Plaintiffs have failed to carry their heavy burden
of showing that a Bahamian forum would deprive them of a full and fair hearing so as to
make the forum-selection clause unreasonable.
Plaintiffs finally argue that enforcing the choice clause would contravene strong public
policy as set forth in ILSA. Response at 8-12. Specifically, Plaintiffs argue that
application of the forum-selection clause would violate a venue provision and an anti-waiver
provision in ILSA. See id.15 ILSA's venue provision, 15 U.SC. § 1719, provides in pertinent
part that an ILSA suit
may be brought in the district wherein the defendant is found or is an
inhabitant or transacts business, or in the district where the offer or sale took
place, if the defendant participated therein, and process in such cases may be
served in any other district of which the defendant is an inhabitant or wherever
the defendant may be found.
13 "An agreement to arbitrate before a specified tribunal is, in effect, a specialized kind of
forum-selection clause that posits not only the situs of suit but also the procedure to be used in resolving
the dispute." Id. at 519.
14 The Court recognizes that Scherk's references to Bremen "were made to emphasize the
Court's rejection of a provincial approach in favor of the policy of giving effect to the agreement of the
parties in international transactions, not to incorporate the Bremen standards wholesale to situs
selections in arbitration clauses." Sam Reisfeld & Son lmort co. v. S. A. Eteco, 530 F.2d 679, 681 (5th
Cir. 1976); see also Bonnerv. city of Prichard, 661 F.2d 1206, 1209(11th Cir. 1981) (en banc) (adopting
as binding precedent all the decisions of the former Fifth Circuit handed down prior to the close of
business on September 30, 1981). Scherk is nevertheless instructive in interpreting and applying
Bremen, and its underlying policies, to the case at bar. Lipcon, 148 F.3d at 1292-97.
15 Although Plaintiffs argue that the forum-selection clause contravenes public policy as
set forth both in the venue and anti-waiver provisions of ILSA, the analysis collapses to a single inquiry.
This is so because, as previously discussed, the Ginn Defendants represent to the Court that, other than
the explicit venue waiver, they do not contend that Plaintiffs have implicitly waived or have purported to
waive the substantive obligations under ILSA which Defendants undertook in the contracts.
13
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The anti-waiver provision, 15 U.S.C. § 1712, provides that "[a]ny condition, stipulation, or
provision binding any person acquiring any lot in a subdivision to waive compliance with any
provision of this chapter or of the rules and regulations of the Secretary shall be void."
Plaintiffs argue that these two provisions render the forum-selection clauses in their contracts
void as contrary to public policy insofar as the forum-selection clauses effectively waive
Plaintiffs' substantial right to choose the forum of their ILSA lawsuit. Were this a domestic
transaction, Plaintiffs' argument would be well taken. See e.g., Boyd v. Grand Trunk W. R.R,
Co 338 U.S. 263,264-65 (1949) (per curiam); Thomasv. Rehab. Servs. of Columbus, Inc.,
45 F. Supp. 2d 1375, 1379-81 (M.D. Ga. 1999). The argument is less persuasive, however,
in the context of an international agreement. Instead, the Court finds Lipcon instructive.
In Licon, the Eleventh Circuit Court of Appeals addressed the "question of whether
the anti-waiver provisions of the United States securities laws preclude enforcement of
certain choice-of-law and forum-selection clauses . . . in international agreements."
Lipcon, 148 F.3d at 1287.16 Acknowledging that the choice clauses "may operate 'in tandem'
as a prospective waiver of the statutory remedies for securities violations," the Eleventh
Circuit nevertheless held that the choice clauses were enforceable and not contrary to public
policy. See id. at 1287, 1298 (quotation and internal quotation marks omitted). In so
holding, the court recognized "that international agreements-even those that render United
States securities law inapplicable-are jgneris" and that "a choice-of-forum clause is 'an
almost indispensable precondition to achievement of the orderliness and predictability
16 The referenced anti-waiver provisions of securities law are similar to ILSA's anti-waiver
provision. See 15 u.s.c. § 77n, 78cc(a); see also 15 u.s.c. § 1712.
14
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essential to any international business transaction[.]" at 1293 (quotation omitted); see
also at 1294 ("[TJhe [Supreme] Court consistently has treated 'truly international
agreements,'differently than domestic transactions, which indisputably are subject to the anti-
waiver provisions of the securities laws[.]") (internal citations omitted). The Eleventh Circuit
emphasized that the Supreme Court's decisions in Bremen and Scherk rest on two
underlying policy concerns: "(1) ensuring 'the orderliness and predictability [that are]
essential to any international business transaction,' and (2) furthering international comity."
ki. at 1294 (internal citations omitted) (alteration in Liicon). To conclude that anti-waiver
provisions of United States statutory laws "categorically preclude sophisticated parties from
entering into international agreements-agreements that by definition involve parties and
subject matter that would be subject to the laws of more than one nation if the parties did not
contract ex ante for provisions governing choice of forum and choice of law-would
undermine both" of these policies. ]c at 1294-95.
Had the contracts made no reference to ILSA, Lipcon appears to instruct that
Defendants may well have been able to lawfully obtain a prospective waiver of all rights
under ILSA through choice of forum and law clauses. I at 1287; see also Choi v.
Samsung Heavy Indus, Co., Ltd., 129 F. App'x 394, 395-96 (9th Cir. 2005) (holding forum-
selection clause designating Korean forum enforceable and, despite anti-waiver provision
in ILSA, not contrary to strong public policy). This Court need not decide that question
because such is not the case here as the contracts specifically invoke ILSA's disclosure
15
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obligations and rights.17 The question for the Court, therefore, is whether the parties can
contractually agree to apply ILSA's substantive requirements yet waive its broad venue
provision. The Court concludes that they may.
If parties may prospectively waive the substantive requirements of ILSA without
offending a strong public policy, then surely they may choose to invoke the substantive law
yet designate a foreign forum. '[T]he enforceability of choice clauses in international
agreements should be determined by a framework designed specifically for the international
commercial context." Lipcon, 148 F.3d at 1294. Such a context "by definition involve[sJ
parties and subject matter that would be subject to the laws of more than one nation if the
parties did not contract for provisions governing choice of forum and choice of law[.]"
k. at 1295. In other words, unlike domestic transactions, international transactions do not
involve a default body of governing law-to the contrary, they are inherently fraught with
conflicting laws. As a necessary corollary, parties to an international agreement must be free
to allocate the applicable law, including the appropriate forum, for litigation that may ensue.
In this case, the parties agreed to apply Bahamian law, but also to incorporate United States
substantive protective rights under ILSA. They also designated a Bahamian forum. To
17 Had the contracts not referenced the statute, it is not clear whether ILSA would have
been applicable to the instant transactions. However, the parties specifically incorporated ILSA's
disclosure obligations and rights, thus the Ginn Defendants must be held to "honor [theirJ bargains" by
complying with those rights and obligations. Li,con, 148 F.3d at 1299 (quotation omitted) (alteration in
Lipcjfl.
16
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disregard this contractually agreed forum would run contrary to the paramount policy
considerations of orderliness and international comity.18
Plaintiffs seek to distinguish this case from Lipcon on three grounds, none of which
is persuasive to the Court. First, Plaintiffs argue that Lipcon "addressed only the anti-waiver
provisions of U.S. securities laws[.J" Response at 11. Plaintiffs explain no significance
to this distinction, however, and the Court discerns none. As previously indicated, the anti-
waiver provision in ILSA is substantially the same as the anti-waiver provisions in the
securities laws. Compare 15 U.S.C. § 1712 § 77n, 78cc(a). Moreover, as "an
antifraud statute utilizing disclosure as its primary tool," ILSA itself operates "much like the
securities laws." Winter v. Hollingsworth Props., lnc.,777 F.2d 1444, 1447 (11th Cir.
1985).
Second, Plaintiffs argue that, unlike the plaintiffs in Lipcon, they do not seek a
decision that ILSA's anti-waiver provision categoricay bars application of a forum-selection
clause, but rather, that under the facts of this case, policy considerations preclude
enforcement of the forum-selection clauses. Response at 11-12. In Lipcon, the
Eleventh Circuit held both that the securities anti-waiver provisions could not categorically
preclude enforcement of foreign choice of forum and law clauses that policy
The court reiterates that the contracts at issue involved sophisticated real estate
transactions involving large sums of money. The parties explicitly agreed to apply Bahamian law in a
Bahamian forum. Nevertheless, Defendants-presumably as a concession to entice United States
buyers who might otherwise be reluctant to enter into such a transaction-specifically agreed to afford
Plaintiffs substantive protection under the United States' anti-fraud statute, ILSA. To allow Plaintiffs to
extend this concession by reference to ILSA's venue provision, and in the process eviscerate the explicit
venue clause in the contracts, would allow Plaintiffs to prevail on the "gotcha" game they project on the
Ginn Defendants.
17
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considerations supported the enforceability of the clauses under the Bremen test.
Lipcon, 148 F.3d at 1295, 1298-99, Having considered Lipcon in its entirety, the Court
disagrees with Plaintiffs' assertion that policy considerations counsel against enforcing the
instant forum-selection clauses.
Finally, citing Thomas, Plaintiffs argue that this case is different than Licon because
this case involves both a venue provision and an anti-waiver provision, whereas Lipcon
involved only an anti-waiver provision. Response at 9-1 1 & n. 11. In Thomas, the
district court articulated a similar distinction holding that a plaintiffs forum-selection clause
was unenforceable as contrary to the strong public policy expressed in the venue provision
of Title VII of the Civil Rights Act of 1964:
Congress enacted a specific venue provision directly in Title VII, in part, to
ensure that an aggrieved party would be afforded a range of choices in
selecting her judicial forum, and thereby reduce some of the obstacles she
may confront to fairly enforce her civil rights. Significantly, this is not a case in
which the expression of public policy concerning choice of venue need be
inferred from a provision unrelated to venue, such as that urged by the
appellants in Lipcon. . . . who challenged a forum selection clause as
unenforceable under the anti-waiver provisions of the United States securities
laws. Rather, the public policy which permits an aggrieved party to bring her
Title VII action in the forum in which the alleged discriminatory acts occurred
is expressly stated in the statute.
Thomas, 45 Supp. 2d at 1381. The Court finds Plaintiffs' reliance on this distinction
misplaced for two reasons.
The first, and most compelling, reason why Plaintiffs' reliance on Thomas is misplaced
is that unlike Lipcon and the instant case, Thomas involved a purely domestic dispute. ,
Thomas, 45 F. Supp. 2d at 1376. Thus Thomas's treatment of Licon is unpersuasive,
because international agreements are j generis and "the enforceability of choice clauses
18
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in international agreements should be determined by a framework designed specifically for
the international commercial contexL" See Lipcon, 148 F.3d at 1293-94.
Second, although the Court takes no issue with the result reached in Thomas, the
particular distinction of Lipcon appears to be strained. In Lipcon, the question for the Court
was not, as in this case or in Thomas, whether the plaintiffs' statutory claims should be
confined to a particular forum, but rather, whether, through application of foreign choice
clauses, the plaintiffs could prospectively waive altogether the protection of the statutory
securities laws. Thus, the public policy in Lipcon was not, as Thomas portrayed it, limited
to an attenuated expression concerning choice of venue. Given the specific and broad
venue clauses at play in the LirDcon case, an attempted distinction from that case based on
another statute's broad venue provision is unpersuasive.
In Lipcon, the securities laws at issue were the Securities Act of 1933 and Securities
Exchange Act of 1934. "[W]here a plaintiff states claims under both the '33 and '34 Acts, the
less restrictive jurisdiction and venue provisions contained in" the 1934 Act govern.
Hilgeman v. Nat'l Ins. Co. of Am., 547 F.2d 298, 302 n.7 (5th Cir. 1977); see also Long v.
Sports44.com, Inc., No. 8:06-CV-2384-T-27TGW, 2007 WL 3072405, at *6 (M.D. Fla, Oct.
19, 2007). The venue provision of the 1934 Act is strikingly broad and allows suits "to be
brought anywhere that the Act is violated or a defendant does business or can otherwise be
found." See Radzanower v. Touche Ross & Co., 426 U.S. 148, 149, 152 (1976); see also
15 U.S.C. § 78aa (giving plaintiffs a choice of venue in "the district wherein any act or
transaction constituting the violation occurred" or "the district wherein the defendant is found
or is an inhabitant or transacts business"). To be sure, the Court in Lipcon confined its
19
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analysis to the anti-waiver provision, without explicit reference to the venue provision, but
that does not diminish its precedential value. Cohen v. Office DeDot, Inc., 204 F.3d
1069, 1076 (11th Cir. 2000) ("[T)he prior panel precedent rule is not dependent upon ... the
skill of the attorneys or wisdom of the judges involved with the prior decision-upon what
was argued or considered. Unless and until the holding of a prior decision is overruled by the
Supreme Court or by the en banc court, that holding is the law of this Circuit regardless of
what might have happened had other arguments been made to the panel that decided the
issue first,").
In light of the foregoing, the Court concludes that Plaintiffs have failed to make a
"clear showing" that enforcement of the Bahamian forum-selection clauses are unreasonable
as repugnant to a strong public policy of the forum where suit was brought. See Licon, 148
F.3d at 1295-96. Having determined that Plaintiffs have failed to make a "clear showing" that
the forum-selection clauses are unreasonable under the circumstances through application
of any of the four Bremen factors, the Court finds that the forum-selection clauses are
enforceable. , Lipcon, 148 F.3d at 1295-96. Nevertheless, in an abundance of caution,
and in order to address certain arguments raised by Plaintiffs that do not directly lend
themselves to any of the Bremen factors, the Court assesses whether the forum-selection
clauses are designed to discourage legitimate claims, and thus, perhaps unenforceable as
fundamentally unfair.19 Plaintiffs argue that all Plaintiffs other than Ronald P. Van and Kathy
19
All forum-selection clauses are evaluated for fundamental fairness and are
unenforceable if fundamentally unfair. See Shute, 499 U.S. at 595; Lipcon, 148 F.3d at 1287, 1290. In
the context of negotiated forum-selection clauses, this analysis is confined to application of the Bremen
(continued...)
20
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J0 Van executed mortgage notes with Defendant Ginn Financial that include Florida choice-
of-law and venue provisions,20 and that the Ginn Entity that issued these notes, Bahamas
Sales Associate LLC, has filed several federal lawsuits in Florida against defaulting
borrowers not parties to the instant case. Response at 67.21 Additionally, Plaintiffs take
issue with the fact that the contracts require litigation in the Bahamas despite having been
carefully structured to avoid the necessity of Plaintiffs having to travel to the Bahamas to
complete the closing of the transactions at issue. Complaint at 20-21, 23. Although
these factors may make Plaintiffs' suit prospects more difficult, and less appealing, the Court
cannot conclude that requiring suit in the Bahamas for a contract concerning the purchase
by Plaintiffs of property in the Bahamas evinces a bad-faith motive of discouraging Plaintiffs
from pursuing legitimate claims. This is especially true given that the forum-selection
clauses are set forth conspicuously in the contracts, and, as previously discussed, were not
19(
continued)
test. See Lipcon, 148 F.3d at 1290, 1295-96. In the context of non-negotiated forum-selection clauses,
the fundamental fairness inquiry may be broader, however. See Shute, 499 U.S. at 595. For example,
'forum-selection clauses contained in form passage contracts" may be unenforceable if they are the
product of a "bad-faith motive" such as "a means of discouraging cruise passengers from pursuing
legitimate claims."
20 Forum-selection clauses are interpreted under ordinary contract principles and may be
categorized as permissive, mandatory, or hybrid. Ocwen Orlando Holdings Corp. v. Harvard Prop.
Trust, LLC, 526 F.3d 1379, 1381 (11th Cir. 2008). "A permissive clause authorizes jurisdiction in a
designated forum but does not prohibit litigation elsewhere. A mandatory clause, in contrast, dictates
an exclusive forum for litigation under the contract." (quotation and internal quotation marks omitted).
A hybrid clause "provides for permissive jurisdiction in one forum that becomes mandatory upon the party
sued." Id. Unlike the mandatory venue provision in the instant contracts, the Florida venue provisions
in the notes provide only for permissive venue in Florida. See Adjustable Rate Balloon Note, attached
as Exhibit A to Declaration of Plaintiff Dana L. Ballinger in Support of Plaintiffs' Opposition to Ginn
Defendants' Motion to Dismiss (Doc. No. 93; Ballinger Declaration), at 4.
21 Plaintiffs also note that their title insurance policies contain Florida choice-of-law and
venue clauses. Stewart Title Guaranty Company, the issuer of the title insurance policies, has been
dismissed from this suit.
21
595 (1991). In sum, Plaintiffs have not discharged their heavy burden of showing that
enforcement of the forum-selection clauses would be unreasonable under the circumstances
or otherwise fundamentally unfair, either through application of the Bremen factors or
otherwise, Accordingly, the Court finds that the Bahamian forum-selection clauses in
Plaintiffs' contracts are valid and enforceable. Licon, 148 F.3d at 1295-96.
2 The forum-selection clauses are applicable
Having determined that the forum-selection clauses in Plaintiffs's contracts are valid
and enforceable, the Court must next consider an issue not addressed by the parties-the
scope of the clauses' applicability. Specifically, the Court must determine which of Plaintiffs'
claims fall within the reach of the forum-selection clauses, and which Ginn Defendants are
entitled to invoke the clauses. Although neither issue merits extensive discussion, the Court
will not rule sub silentio,22
As to the first issue, although Plaintiffs vigorously contest the enforceability of the
forum-selection clauses, they do not dispute that their claims fall within the broad scope of
the forum-selection clauses, Each such clause provides for Bahamian courts to be the
exclusive "venue for any dispute, proceeding, suit or legal action concerning the
interpretation, construction, validity, enforcement, performance of, or related in any way to,
22 The parties' briefing presumes that the venue issue presents an all-or-nothing question-
that is, either that all claims against all Ginn Defendants should be dismissed for improper venue, or that
no claims against any Ginn Defendant should be dismissed for improper venue. While the Court
ultimately finds that all claims against all Ginn Defendants are due to be dismissed for improper venue,
the court finds a brief analysis appropriate.
22
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this Contract or any other agreement or instrument executed in connection with this
Contract" See Contracts, attached as Exhibits C-K to Complaint, at1122. Each count of the
Complaint incorporates by reference the allegations as to the respective Plaintiffs' execution
of their contracts. Likewise, the Property Reports forming the central basis for most of
Plaintiffs' claims reference, and are explicitly referenced in, the contracts themselves. Thus,
the structure of the Complaint and the factual allegations therein reflects that Plaintiffs'
claims fall within the broad scope of the forum-selection clauses.
As to the second issue, there is no question but that Ginn-La, as a party to the
contracts, is entitled to invoke the forum-selection clause therein, Not so clear cut is the
ability of the remaining Ginn Defendants, who are not signatories to the contracts, to invoke
the forum-selection clauses. As "a contractual right[,}" a forum-selection clause "cannot
ordinarily be invoked by or against a party who did not sign the contract in which the
provision appears." See Cooperv. Meridian Yachts, Ltd., 575 F.3d 1151, 1169 (11th Cir.
2009) (citation omitted). Nevertheless, a non-signatory to a contract may invoke such a right
against a signatory in certain circumstances. For example, in the similar scenario of an
arbitration clause within a contract, the Eleventh Circuit Court of Appeals has recognized that
a non-signatory to a contract may invoke an arbitration clause therein under a theory of
equitable estoppel, under agency or related principles, or where the non-signatory is an
23
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intended third-party beneficiary of the contract. MS Dealer Serv. Cori. v. Franklin, 177
F.3d 942, 947 (11th Cir. 1999).23
An equitable estoppel theory
allows a nonsignatory to compel arbitration in two different circumstances.
First, equitable estoppel applies when the signatory to a written agreement
containing an arbitration clause "must rely on the terms of the written
agreement in asserting [its] claims" against the nonsignatory. When each of
a signatory's claims against a nonsignatory "makes reference to" or "presumes
the existence of" the written agreement, the signatory's claims "arise[] out of
and relate[] directly to the [written] agreement," and arbitration is appropriate.
Second, "application of equitable estoppel is warranted. . . when the signatory
[to the contract containing the arbitration clause] raises allegations of
substantially interdependent and concerted misconduct by both the
nonsignatory and one or more of the signatories to the contract."
hi (internal citations omitted) (alterations in MS Dealer). The Court finds each circumstance
applicable here, and determines that all the Ginn Defendants are entitled to invoke the
Bahamian forum-selection clause in Plaintiffs' contracts.
IV. Conclusion
In light of the foregoing, the Court determines that the instant Motion is due to be
granted, and Plaintiffs' claims against the Ginn Defendants are due to be dismissed for
23 As the Court previously indicated, arbitration agreements are similar to forum-selection
clauses. See Scherk, 417 U.S. at 519; see also Anders v. Hometown Mortg. Services, mc., 346 F.3d
1024, 1029 (11th Cir. 2003) (citation omitted). The Court recognizes, however, that the legal standards
for enforceability differ, Sam Reisfeld & Son, 530 F.2d at 680-81, and that there is a liberal federal
policy in favor of arbitration, see Becker v. Davis, 491 F.3d 1292, 1298 (11th Cir. 2007).
Nevertheless, in Cooper, the Eleventh Circuit explicitly applied the law from arbitration cases in
determining whether a signatory could bind a non-signatory to a choice-of-law provision in a contract.
See Cooper, 575 F.3d at 1169-70. The discussion in Cooper, which also considered Lipcon's
endorsement of an alternative theory of binding a non-party to a forum-selection, strongly suggests that
any of the established theories for allowing a non-signatory to invoke a contract's arbitration clause
should also be sufficient to allow a non-signatory to invoke a forum-selection clause.
24
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improper venue pursuant to Rule 12(b)(3). In so concluding, the Court expresses no view
as to the merits of Plaintiffs' claims, but simply holds that Plaintiffs "must 'honor [their]
bargains,' and attempt to vindicate their claims in" Bahamian court. Lipcon, 148 F3d
at 1299 (quotation omitted) (alteration in LiconI.
Accordingly, it is ORDERED:
1. Defendants GinnLa West End, Limited, Ginn Financial Services, Robert F.
Masters II, and Edward R. Ginn, Ill's Motion to Dismiss Plaintiffs' Second Amended
Complaint and Incorporated Memorandum of Law in Support (Doc. No. 77) is GRANTED.
2. Plaintiffs' claims against the Ginn Defendants are dismissed without prejudice
for improper venue pursuant to Rule 12(b)(3), Fed! ules of Civil Procedure.