Court Opinion

ID: 9326208
Source: CourtListenerOpinion
Date Created: 2022-12-15 16:00:23.890005+00
Date Added: 2024-06-11T17:15:03.735586
License: Public Domain

21-2612
    Raad v. Bank Audi S.A.L.

                           UNITED STATES COURT OF APPEALS
                               FOR THE SECOND CIRCUIT

                                      SUMMARY ORDER
RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A SUMMARY
ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY FEDERAL RULE OF
APPELLATE PROCEDURE 32.1 AND THIS COURT’S LOCAL RULE 32.1.1. WHEN CITING A SUMMARY ORDER
IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL APPENDIX OR AN
ELECTRONIC DATABASE (WITH THE NOTATION “SUMMARY ORDER”). A PARTY CITING A SUMMARY
ORDER MUST SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.

                  At a stated term of the United States Court of Appeals for the Second Circuit,
    held at the Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of
    New York, on the 15th day of December, two thousand twenty-two.

    PRESENT:
                PIERRE N. LEVAL,
                REENA RAGGI,
                MYRNA PÉREZ,
                      Circuit Judges.
    _____________________________________

    Patricia Raad, Stephanie Raad, David Raad,

                               Plaintiffs-Appellants

                      v.                                                   No. 21-2612

    Bank Audi SAL,

                               Defendant-Appellee.

    _____________________________________

    FOR PLAINTIFFS-APPELLANTS:                         DOUGLAS A. KELLNER, Kellner Herlihy
                                                       Getty & Friedman LLP, New York, NY.

    FOR DEFENDANT-APPELLEE:                            JEFFREY ROTENBERG, (Michael D. Manzo,
                                                       on the brief) DLA Piper LLP, New York,
                                                       NY.
 1            Appeal from a judgment of the United States District Court for the Southern District of

 2   New York (Alison J. Nathan, J.).

 3            UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED, AND

 4   DECREED that the September 30, 2021 judgment of the district court is VACATED and the

 5   action is REMANDED for further proceedings consistent with this summary order.

 6            This is a breach of contract case. Plaintiffs Patricia, Stephanie, and David Raad (together,

 7   the “Raads”) sued Defendant Bank Audi S.A.L. (“Bank Audi” or the “Bank”), alleging that the

 8   Bank cheated them out of millions of U.S. dollars by not allowing them to withdraw their money

 9   from their Lebanese bank accounts. The Raads appeal the district court’s dismissal of their

10   complaint for forum non conveniens based on the forum clauses in their agreements with the Bank.

11   We assume the parties’ familiarity with the underlying facts, the procedural history, and the issues

12   on appeal and recount only as necessary to explain our decision.

13                                                     BACKGROUND

14            The Raads have bank accounts with Bank Audi, a leading bank in Lebanon. To open their

15   accounts, the Raads signed a series of agreements (“General Agreements”) with the Bank. The

16   parties agree that they are bound by the General Agreements and that the General Agreements

17   govern their relationships. Chapter Six, Section 10 of the General Agreements contains a choice

18   of law and forum clause.1 It provides:

     1
       The quoted language is from the General Agreements that Stephanie, David, and Patricia signed in 2016, 2017, and
     2020, respectively. Patricia signed an Arabic language version of the General Agreement in 2014, which, according
     to the Bank’s translation, stated “[t]he Beirut courts alone shall have jurisdiction over any dispute that may arise of
     this Agreement and its annexes or of the accounts of the client or the other account holders and all matters related to
     or resulting from the accounts.” Joint App’x at 417 (emphasis added). The parties disagree as to which version of the
     General Agreements governs Patricia’s relationship with the Bank. The district court did not reach this issue.
     Accordingly, we remand the issue to the district court and consider only the language quoted in the text above. See

                                                               2
 1            [T]his Agreement shall be governed by and construed in accordance with Lebanese
 2            laws. Beirut courts shall have jurisdiction over any dispute that may arise of this
 3            Agreement and its annexes or of the Accounts of the Client or the other Account
 4            holders and all matters related to or resulting from the Accounts. However, the
 5            Bank shall be entitled to take legal actions against the Client, the Cardholder, the
 6            Secondary User or their successors before any other courts in Lebanon or abroad.
 7
 8   Joint App’x at 37.2

 9            Due to increasing financial instability in Lebanon, in October 2019 the Raads requested

10   that the Bank transfer their funds to their American bank accounts. To date, the Bank has not

11   complied with their request.

12            In December 2020, the Raads filed breach of contract claims under Lebanese law in New

13   York Supreme Court, County of New York. The Bank removed the case to federal court. It then

14   moved to dismiss the Raads’ claims on jurisdictional and forum non conveniens grounds and for

15   failure to state claims. The district court granted the motion on forum non conveniens grounds

16   based on the forum clause in the General Agreements. It concluded that the clause conferred

17   exclusive jurisdiction and was valid. See Raad v. Bank Audi S.A.L., No. 20-cv-11101, 2021 WL

18   4482285, at *4 (S.D.N.Y. Sept. 29, 2021).

     Fasano v. Yu Yu, 921 F.3d 333, 337 (2d Cir. 2019) (“In general, a federal appellate court does not consider an issue
     not passed upon below.” (quoting United States v. Gomez, 877 F.3d 76, 92 (2d Cir. 2017))).
     2
       We note that we do not apply Lebanese law to our analysis of the forum clause, though the choice of law provision
     instructs that the General Agreements “shall be governed by and construed in accordance with Lebanese laws.” Joint
     App’x at 37. While choice of law provisions are generally applied to determine whether a forum clause confers
     exclusive jurisdiction on the selected forum, see Martinez v. Bloomberg LP, 740 F.3d 211, 218 (2d Cir. 2014), in this
     case, neither party objected to the district court’s reliance on federal caselaw to resolve this issue. Moreover, although
     the parties both cite Lebanese law and the affidavits of their Lebanese legal experts on appeal, “they do not rely on
     any distinctive features of [Lebanese] law” that distinguish it from general contract law principles as set out in federal
     precedent. Phillips v. Audio Active Ltd., 494 F.3d 378, 386 (2d Cir. 2007). Therefore, we “apply general contract law
     principles and federal precedent to discern the meaning and scope of the forum clause” in accordance with this Court’s
     approach in Phillips v. Audio Active Ltd. Id. at 385–86.

                                                                 3
 1                                                 DISCUSSION

 2          “[T]he appropriate way to enforce a forum-selection clause pointing to a state or foreign

 3   forum is through the doctrine of forum non conveniens.” Atl. Marine Constr. Co. v. U.S. Dist. Ct.

 4   for W. Dist. of Tex., 571 U.S. 49, 60 (2013). This Court has yet to decide whether a dismissal for

 5   forum non conveniens based on a forum clause is reviewed de novo or for abuse of discretion. See

 6   Martinez, 740 F.3d at 217. Because we conclude that dismissal was improper under either

 7   standard, we need not resolve the question here.

 8          To determine whether a district court has properly dismissed a claim based on a forum

 9   clause, we employ a four-part analysis. We ask:

10          (1) whether the clause was reasonably communicated to the party resisting
11          enforcement; (2) whether the clause is mandatory or permissive, i.e., whether the
12          parties are required to bring any dispute to the designated forum or simply permitted
13          to do so; and (3) whether the claims and parties involved in the suit are subject to
14          the forum selection clause. If the forum clause was communicated to the resisting
15          party, has mandatory force and covers the claims and parties involved in the
16          dispute, it is presumptively enforceable. A party can overcome this presumption
17          only by (4) making a sufficiently strong showing that enforcement would be
18          unreasonable or unjust, or that the clause was invalid for such reasons as fraud or
19          overreaching.
20
21   Id. (quotation marks, alteration, and citations omitted).

22          The parties agree that the first and third parts of the analysis are satisfied here. At issue on

23   appeal is whether the clause relating to jurisdiction mandatorily selected Beirut as the exclusive

24   jurisdiction for suit (as opposed to mandating that no party may object to the institution of a suit

25   in Beirut). Here, we determine that the district court erred in finding that the forum clause

26   conferred exclusive jurisdiction on the Beirut courts.

                                                        4
 1            An exclusive forum clause “require[s] that disputes must be brought in the designated

 2   forum, to the exclusion of all other fora where jurisdiction may also lie.” Glob. Seafood Inc., 659

 3   F.3d at 225 (emphasis omitted). A forum clause selects an exclusive jurisdiction for litigation

 4   “when it confers exclusive jurisdiction on the designated forum or incorporates obligatory venue

 5   language.” Phillips, 494 F.3d at 386. A nonexclusive forum clause, by contrast, “confers

 6   jurisdiction in the designated forum, but does not deny plaintiff his choice of forum, if jurisdiction

 7   there is otherwise appropriate.” Id. Correspondingly, when parties contract to a nonexclusive

 8   forum clause, the presumption of enforceability does not apply. See Aguas Lenders Recovery Grp.

 9   v. Suez, S.A., 585 F.3d 696, 700 (2d Cir. 2009).

10            Where the forum clause only specifies jurisdiction (and does not incorporate obligatory

11   venue language), it will be considered nonexclusive if it does not contain “further language

12   indicating the parties’ intent to make jurisdiction exclusive.” John Boutari & Son, Wines & Spirits,

13   S.A. v. Attiki Imps. & Distribs. Inc., 22 F.3d 51, 52 (2d Cir. 1994). Here, the forum clause specifies

14   jurisdiction—“Beirut courts shall have jurisdiction,” Joint App’x at 37—but contains no additional

15   language indicating that the Beirut courts have exclusive jurisdiction. See Glob. Seafood Inc., 659

16   F.3d at 225–226 (finding the forum clause 3 permissive because it contained language that

17   “indicate[d] an intent to confer upon the [fora] the power and authority to hear disputes,” but lacked

18   “any clear exclusionary or obligatory language” that indicated that the fora had exclusive

19   jurisdiction.).

     3
      The clause at issue in Global Seafood provided that “[t]his Agreement is governed by Irish Law and the Irish Courts.”
     659 F.3d at 222.

                                                               5
 1           The district court reasoned that because the clause used the word “shall,” it mandated

 2   exclusive jurisdiction in the Beirut courts. This was error. In John Boutari, we found a forum

 3   clause substantially similar to the one here4 nonexclusive because it lacked language designating

 4   the selected fora as the sole sites of jurisdiction. 22 F.3d at 53. This was despite the fact that the

 5   clause, as here, contained the mandatory term “shall.” Id. We further explained that though the

 6   word “shall” constitutes mandatory language, it “mandates nothing more than that the [selected

 7   fora] have jurisdiction.” Id. (quotation marks omitted). Accordingly, the presence of the word

 8   “shall” is not sufficient to demonstrate that the clause confers exclusive jurisdiction.

 9           The Bank also argues that the forum clause’s “carve-out” provision—“However, the Bank

10   shall be entitled to take legal actions against the Client . . . before any other courts in Lebanon or

11   abroad”—must be read as permitting only the Bank to bring legal action outside of the Beirut

12   courts. Joint App’x at 37. The Bank contends that reading the provision otherwise would render

13   it superfluous, and, as a result, inconsistent with basic principles of contract law. This argument

14   is unavailing because there is an alternative reading—that the carve-out explicitly entitles the Bank

15   to bring, but does not prevent the Raads from bringing, legal action outside the Beirut courts—

16   which does not give the Bank the exclusive right to bring legal action elsewhere or render the

17   carve-out superfluous.

18           Accordingly, the forum clause in the General Agreements contains no “specific language

19   of exclusion clearly designating [the Beirut courts] as having exclusive jurisdiction” and, as a

20   result, we must interpret the clause as only authorizing suit in Beirut. Glob. Seafood Inc., 659 F.3d

     4
      The clause at issue in John Boutari provided that “[a]ny dispute arising between the parties hereunder shall come
     within the jurisdiction of the competent Greek Courts, specifically of the Thessaloniki Courts.” See 22 F.3d at 52.

                                                             6
1   at 226. It was therefore error to rely on the presumption of enforceability to dismiss for forum non

2   conveniens.

3          For the foregoing reasons, the judgment of the district court is VACATED, and the case is

4   REMANDED for further proceedings consistent with this opinion.

5                                                 FOR THE COURT:
6                                                 Catherine O’Hagan Wolfe, Clerk of Court
7

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