Lighthouse MGA, L.L.C. v. First Premium Insurance Group, Inc.

Case: 11-30293 Document: 00511657518 Page: 1 Date Filed: 11/07/2011
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
FILED
November 7, 2011
Nos. 11-30293, 11-30500 Lyle W. Cayce
Summary Calendar Clerk
LIGHTHOUSE MGA, L.L.C.,
Plaintiff - Appellant
v.
FIRST PREMIUM INSURANCE GROUP, INCORPORATED,
Defendant - Appellee
_______________________________________________________________________
FIRST PREMIUM INSURANCE GROUP, INCORPORATED,
Plaintiff - Appellee
v.
LIGHTHOUSE MGA, L.L.C.,
Defendant - Appellant
Appeals from the United States District Court for the
Eastern District of Louisiana
(10-CV-4635)
Before HIGGINBOTHAM, DAVIS, and ELROD, Circuit Judges.
Case: 11-30293 Document: 00511657518 Page: 2 Date Filed: 11/07/2011
Nos. 11-30293, 11-30500
PER CURIAM:*
In August 2009, Lighthouse MGA, L.L.C. (“Lighthouse”) and First
Premium Insurance Group, Inc. (“First Premium”) entered into a marketing
services contract. We are asked to decide whether the forum selection clause in
their contract, selecting a state court, is enforceable. We find that the clause is
enforceable and affirm the district court’s dismissal of Lighthouse’s suit against
First Premium. In addition, we dismiss Lighthouse’s appeal of the district
court’s decision to remand to state court First Premium’s suit against
Lighthouse.
I.
Resting on diversity jurisdiction, Lighthouse sued First Premium in the
United States District Court for the Eastern District of Louisiana, seeking a
declaratory judgment under Louisiana law that First Premium had breached
and was entitled to no further fees under their contract. First Premium then
sued Lighthouse in the 22nd Judicial District Court, Parish of St. Tammany, of
the State of Louisiana, seeking a declaratory judgment that their contract was
enforceable under Louisiana law, that First Premium did not breach, and that
Lighthouse was bound to pay First Premium a fee under the contract.
First Premium filed a motion to dismiss the federal complaint pursuant
to Rules 12(b)(1) and 12(b)(3) of the Federal Rules of Civil Procedure, seeking to
enforce the forum selection clause. The forum selection clause specified that any
suits related to the contract were to be brought solely in Louisiana’s 22nd
Judicial District Court, Parish of St. Tammany. The district court (Africk, J.)
granted First Premium’s motion to dismiss the federal complaint and dismissed
the case without prejudice to Lighthouse filing its claims in state court.
*
Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH CIR.
R. 47.5.4.
2
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Lighthouse then promptly removed the state-filed case to the federal
district court. The district court granted First Premium’s motion to remand to
state court pursuant to 28 U.S.C. § 1447(c), citing its prior decision, for want of
jurisdiction with respect to any legal action or proceeding relating to the parties’
contract.1
Lighthouse timely appealed the district court’s orders in both cases, here
consolidated for review.
II.
A.
Turning first to the dismissal of Lighthouse’s suit against First Premium,
we review de novo a district court’s decision to enforce a forum selection clause.2
The district court did not specify whether its dismissal of Lighthouse’s suit was
pursuant to Rule 12(b)(1) or Rule 12(b)(3) of the Federal Rules of Civil
Procedure.3 “‘Our de novo review under either Rule 12(b)(1) or Rule 12(b)(3)
requires us to view all the facts in a light most favorable to the plaintiff.’”4
“‘Moreover, under both Rule 12(b)(1) and Rule 12(b)(3), the court is permitted to
look at evidence in the record beyond simply those facts alleged in the complaint
and its proper attachments.’”5
1
See First Premium Ins. Group, Inc. v. Lighthouse MGA, L.L.C., Civil Action No.
11–613, 2011 WL 1936298, at *2 (E.D. La. May 18, 2011).
2
Ginter ex rel. Ballard, Belcher, Prendergast & LaPorte, 536 F.3d 439, 441 (5th Cir.
2008).
3
This court has not yet answered “the ‘enigmatic question of whether motions to
dismiss on the basis of forum selection clauses are properly brought as motions under [Rule]
12(b)(1) [or] 12(b)(3),’” Lim v. Offshore Specialty Fabricators, Inc., 404 F.3d 898, 902 (5th Cir.
2005) (alteration in original) (quoting Haynsworth v. The Corporation, 121 F.3d 956, 961 (5th
Cir. 1997)), and we need not resolve that issue here. See Ambraco Inc. v. Bossclip B V, 570
F.3d 233, 238 n.1 (5th Cir. 2009).
4
Ambraco, 570 F.3d at 237-38 (quoting Ginter, 536 F.3d at 448 (Dennis, J., dissenting)).
5
Id. at 238 (quoting Ginter, 536 F.3d at 449 (Dennis, J., dissenting)).
3
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Federal law determines whether a district court must enforce a forum
selection clause.6 Forum selection clauses are presumptively enforceable, and
“where a litigant . . . attempts to have a case dismissed based on a contractual
provision requiring suit to be filed in state court, the forum-selection clause
should be upheld unless the party opposing its enforcement can show that the
clause is unreasonable.”7 A forum-selection clause may be deemed unreasonable
where the party challenging application of the clause makes a “clear showing”
that:
(1) the incorporation of 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.8
The forum selection clause here read as follows:
The agreement shall be governed by and interpreted in accordance
with the laws of the State of Louisiana without reference to
principles of conflicts of law. [Lighthouse] irrevocably and
unconditionally submits in any legal action or proceeding related to
this agreement or for recognition of any judgment in respect thereof,
to the exclusive jurisdiction of the 22nd Judicial District Court,
Parish of St. Tammany, State of Louisiana.9
6
Alliance Health Group LLC v. Bridging Health Options LLC, 553 F.3d 397, 399 (5th
Cir. Miss. 2008)(“Federal law applies to determine the enforceability of forum selection clauses
in both diversity and federal question cases.” (citations and quotation marks omitted)).
7
Id.
8
Haynsworth, 121 F.3d at 963.
9
Rawle 63 (No. 11-30293).
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First Premium’s general counsel drafted the marketing services contract that
included this forum selection clause. The general counsel was also a shareholder
of the company and the brother of First Premium’s President.
Lighthouse argues that the forum selection clause is unreasonable and
should not be enforced on the basis that (1) there is a constitutional right to
diversity jurisdiction, and trial before a court in the forum and venue designated
by the contract will deprive Lighthouse of a court free of “Local Bias”;10 (2) the
incorporation of the forum selection clause in the contract resulted from the
drafting attorney’s violation of Louisiana’s Rules of Professional Conduct for
attorneys and from fraud and overreaching; and (3) enforcement of the clause
would contravene a “strong public policy” of the State of Louisiana set forth in
its Rules of Professional Conduct.11 None of those arguments is availing.
First, Lighthouse’s argument that it has a constitutional right to have
disputes related to its contract with First Premium heard in a federal court
pursuant to the court’s diversity jurisdiction is not properly before us as it was
not raised in the court below.12 Even if it were properly before this court,
Lighthouse’s first argument is without merit. The United States Constitution
does not preclude parties to a contract from waiving their rights to have
contract-related disputes heard in federal court. In more than one case, this
court has reviewed a forum selection clause that purported to give state courts
exclusive jurisdiction over actions connected to the contract and held that the
10
See Appellant’s Br. (No. 11-30293) at 25-26 (quoting Guaranty Trust Co. v. York, 326
U.S. 99 (1945)).
11
Id. at 30-31.
12
In its Memorandum in Support of Ex Parte Motion for Continuance of Hearing in
case number 2:10-cv-4635, Lighthouse merely stated that “any jurisdictional clause in a
contract must provide a knowing and intentional waiver of diversity jurisdiction.” R. 66 (No.
11-30293); see also id. at 72 (stating, in the Opposition to First Premium’s Motion to Dismiss,
that Lighthouse “was unaware that it was waiving its right to the protection of federal
jurisdiction”).
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forum selection clause was an enforceable waiver of a party’s right to have
disputes connected to the contract heard in a federal forum.13
To the extent that Lighthouse is arguing that it did not knowingly and
willingly waive its right to be heard in a federal court, it is not supported by the
record. Lighthouse contends that its waiver was not knowing and voluntary
because First Premium’s general counsel failed to highlight for Lighthouse the
forum selection clause and other specific provisions in the parties’ contract. This
contention is unavailing. Under Louisiana law: “[a] person who signs a written
instrument is presumed to know its contents and cannot avoid its obligations by
contending that he did not read it, or that it was not explained or that he did not
understand it.”14 Therefore, Lighthouse cannot maintain that it did not
knowingly and willingly waive diversity jurisdiction on the basis that First
Premium’s general counsel did not discuss the forum selection clause with
Lighthouse or warn Lighthouse of the clause’s existence.15
Second, assuming, without deciding, that a violation of Louisiana’s Rules
of Professional Conduct for attorneys would provide a basis for this court to
deem the forum selection clause in the parties’ contract unreasonable, no
evidence in the record supports Lighthouse’s claim that the incorporation of the
forum selection clause into the parties’ contract resulted from a violation of
Louisiana’s Rules of Professional Conduct for attorneys.16
13
See Ensco Int'l Inc. v. Certain Underwriters at Lloyd’s, 579 F.3d 442, 449 (5th Cir.
2009); Collin County v. Siemens Bus. Servs., 250 F. App’x 45, 52 (5th Cir. 2007) (unpublished);
Argyll Equities LLC v. Paolino, 211 F. App’x 317, 318 (5th Cir. 2006) (unpublished).
14
Smith v. Leger, 439 So. 2d 1203, 1206 (La. App. 1st Cir. 1983).
15
See Appellant’s Br. (No. 11-30293) at 26-27.
16
Lighthouse appears to argue that the forum selection clause was incorporated into
the contract through “fraud” or “overreaching” because the incorporation of the clause resulted
from violations of Louisiana’s Rules of Professional Conduct for attorneys. See Appellant’s Br.
(No. 11-30293) at 54-56, 61. Lighthouse does not allege any facts or make any arguments in
6
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The first two Rules of Professional Conduct cited by Lighthouse are Rule
1.7, “Conflict of Interest: Current Clients,” and Rule 1.8, “Conflict of Interest:
Current Clients: Specific Rules.” Rule 1.7 states that “a lawyer shall not
represent a client if the representation involves a concurrent conflict of
interest.”17 Rule 1.8 states that, as a general rule, “[a] lawyer shall not enter
into a business transaction with a client or knowingly acquire an ownership,
possessory, security, or other pecuniary interest adverse to a client.”18
Lighthouse argues that First Premium’s general counsel violated those two rules
because he “chose to represent both [Lighthouse and First Premium] by drafting
a contract for both of them to sign, when he knew he had a . . . pecuniary
interest [as a shareholder of First Premium] which gave him a clear and present
conflict.”19 However, Lighthouse’s Director of Marketing has affirmed that the
general counsel was “the attorney for First Premium,”20 and there is no evidence
in the record that the general counsel ever undertook to give legal advice to
Lighthouse or purported to draft the contract on Lighthouse’s behalf. As First
Premium notes, even if Lighthouse subjectively believed that First Premium’s
support of its claim of fraud or overreaching beyond the facts that it cites in support of its
claim that the forum selection clause was incorporated into the contract as a result of
violations of the Rules of Professional Conduct. To the extent that Lighthouse’s reference to
“fraud” or “overreaching” is another argument that it did not legally consent to the forum
selection clause, see id. at 54 (quoting La. Civ. Code arts. 1779, 1819, 1847), as we have
already noted, there is no evidence that Lighthouse unknowingly or involuntarily waived its
right to have disputes related to the contract heard in federal court.
17
La. St. Bar Ass’n. Art. XVI § 1.7.
18
Id. § 1.8.
19
Appellant’s Br. (No. 11-30293) at 34 .
20
Rawle 75 (No. 11-30293).
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general counsel was also Lighthouse’s attorney, such a belief would not be
reasonable.21
The third Rule of Professional Conduct cited by Lighthouse is Rule 4.3.
That rule states:
In dealing on behalf of a client with a person who is not represented
by counsel, a lawyer shall not state or imply that the lawyer is
disinterested. When the lawyer knows or reasonably should know
that the unrepresented person misunderstands the lawyer's role in
a matter, the lawyer shall make reasonable efforts to correct the
misunderstanding. The lawyer shall not give legal advice to an
unrepresented person, other than the advice to secure counsel, if the
lawyer knows or reasonably should know that the interests of such
a person are or have a reasonable possibility of being in conflict with
the interests of the client.22
In this case, there is no evidence that the general counsel ever stated or implied
to Lighthouse that he was disinterested or that he gave any legal advice to
Lighthouse. Nor is there any evidence that Lighthouse misunderstood his role
as counsel for First Premium, let alone any evidence that he knew or should
have known that Lighthouse misunderstood his role.23 As First Premium notes,
no authority supports Lighthouse’s contention that First Premium’s general
counsel provided legal advice to Lighthouse merely by drafting the contract.
The fourth Rule of Professional Conduct cited by Lighthouse is Rule 8.4(c):
a lawyer may not “[e]ngage in conduct involving dishonesty, fraud, deceit or
misrepresentation.”24 There is no evidence that the general counsel made any
21
See Zichichi v. Jefferson Ambulatory Surgery Ctr., LLC, Civil Action No. 07-2774,
2008 WL 2859232, at *4 (E.D. La. July 22, 2008) (“It would be unreasonable for Dr. Zichichi
to think that he was establishing an attorney-client relationship with an adverse party's
lawyer.”).
22
La. St. Bar Ass’n. Art. XVI § 4.3.
23
See R. 75 (No. 11-30293).
24
Id. § 8.4(c).
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false or misleading statements to Lighthouse. To the extent that Lighthouse’s
argument is based on the general counsel’s failure to point out or explain the
forum selection clause to Lighthouse, First Premium’s general counsel did not
have a fiduciary relationship with Lighthouse that would give rise to a duty to
convey that information under Louisiana law.25 Lighthouse has not
demonstrated that the forum selection clause was incorporated into the parties’
contract due to a violation of Rule 8.4(c).
Because Lighthouse has not demonstrated that enforcement of the forum
selection clause in the parties’ marketing services contract would be
unreasonable, we affirm the district court’s dismissal of Lighthouse’s suit
against First Premium.
B.
We next turn to the district court’s decision granting First Premium’s
motion to remand its suit against Lighthouse to Louisiana state court.
“Congress has severely circumscribed the power of federal appellate courts to
review remand orders.”26 According to 28 U.S.C. § 1447(d), “an order remanding
a case to the State court from which it was removed is not reviewable on appeal
or otherwise.” However, the Supreme Court has held that “§ 1447(d) must be
read in pari materia with § 1447(c), so that only remands based on grounds
specified in § 1447(c) are immune from review under § 1447(d).”27 Thus, as this
court has previously explained, we “lack[] jurisdiction under § 1447 if the district
court based its remand order on either a lack of subject matter jurisdiction or a
25
See, e.g., Becnel v. Grodner, 982 So. 2d 891, 895 (La. App. 4th Cir. 2008) (“In the
instant case, there was no special fiduciary relationship between Mr. Becnel and his opposing
counsel that would give rise to a duty to disclose. In negotiating and perfecting the settlement
. . ., the only fiduciary duty the McGlinchey defendants owed was to their client.”).
26
Schexnayder v. Entergy La., Inc., 394 F.3d 280, 283 (5th Cir. 2004).
27
Quackenbush v. Allstate Ins. Co., 517 U.S. 706, 711-12 (1996).
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defect in removal procedure.”28 “[W]e will only review remand orders if the
district court affirmatively states a non-1447(c) ground for remand.”29
In this case, the district court stated explicitly that its decision to remand
First Premium’s suit was based on lack of subject matter jurisdiction, one of the
grounds specified in 28 U.S.C. § 1447(c).30 The district court did not
“affirmatively state[] [any] non-1447(c) ground for remand.”31 Therefore, we lack
jurisdiction to review the district court’s order of remand, and Lighthouse’s
appeal from that order is dismissed for want of jurisdiction.
III.
The district court’s dismissal of Lighthouse’s suit against First Premium
is AFFIRMED, and Lighthouse’s appeal from the district court’s order
remanding to state court First Premium’s suit against Lighthouse is
DISMISSED.
28
Schexnayder, 394 F.3d at 283 (citing Quackenbush, 517 U.S. at 712; 28 U.S.C.
§ 1447(c)).
29
Smith v. Texas Children’s Hosp., 172 F.3d 923, 927 (5th Cir. 1999) (quotation marks
and citation omitted).
30
First Premium, 2011 WL 1936298, at *1-*2 (“A district court must remand a case to
state court if, at any time before final judgment, it appears that the court lacks subject matter
jurisdiction. 28 U.S.C. § 1447(c). . . . For the reasons set forth in this Court’s previous order,
the Court finds that Lighthouse has failed to sustain its burden of proving that this Court has
jurisdiction over claims relating to the Agreement.”).
31
Smith, 172 F.3d at 927 (quotation marks and citation omitted).
10