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1st Source Bank v. Neto

United States Court of Appeals, Seventh Circuit

June 26, 2017

1st Source Bank, Plaintiff-Appellee,
v.
Joaquim Salles Leite Neto, Defendant-Appellant.

          Argued May 22, 2017

         Appeal from the United States District Court for the Northern District of Indiana, South Bend Division. No. 3:15-CV-261 - William C. Lee, Judge.

          Before Flaum, Easterbrook, and Sykes, Circuit Judges.

          Flaum, Circuit Judge.

         Joaquim Salles Leite Neto is a defendant in parallel civil litigation brought by 1st Source Bank in Indiana and Brazil. Neto sought antisuit injunctive relief in Indiana district court to prevent 1st Source from pursuing its claims in Brazil. The district court denied Nero's motion, and Neto appeals. For the following reasons, we affirm.

          I. Background

         In 2009, Neto entered into a trust agreement with Wells Fargo Bank to purchase an airplane for use in his business. Wells Fargo borrowed $6 million from 1st Source and pledged the aircraft as collateral. In January 2011, Neto signed a guarantee for that loan. The guarantee contains the following disputed choice-of-law and venue provisions:

3.02 Governing Law. This guarantee shall be governed by and construed in accordance with the laws of the state of Indiana .... In relation to any dispute arising out of or in connection with this guarantee the guarantor [i.e., Neto] hereby irrevocably and unconditionally agrees that all legal proceedings in connection with this guarantee shall be brought in the United States District Court for the District of Indiana located in South Bend, Indiana, or in the judicial district court of St. Joseph County, Indiana, and the guarantor waives all rights to a trial by jury provided however that the lender [i.e., 1st Source] shall have the option, in its sole and exclusive discretion, in addition to the two courts mentioned above, to institute legal proceedings against the guarantor for repossession of the aircraft in any jurisdiction where the aircraft may be located from time to time, or against the guarantor for recovery of moneys due to the lender from the guarantor, in any jurisdiction where the guarantor maintains, temporarily or permanently, any asset. The parties hereby consent and agree to be subject to the jurisdiction of all of the aforesaid courts and, to the greatest extent permitted by applicable law, the parties hereby waive any right to seek to avoid the jurisdiction of the above courts on the basis of the doctrine of forum non conveniens.

         ("Section 3.02") (capitalization removed). In June 2012, the Brazilian government seized the airplane. For several years, Neto continued to pay 1st Source for his debt on the plane, making almost $3 million in payments. Neto stopped making payments in December 2014.

         In June 2015, 1st Source sued Neto in the Northern District of Indiana to collect the remainder of the debt. 1st Source's amended complaint asserted:

Venue in the Northern District of Indiana and the South Bend Division is proper .... A substantial part of the events or omissions giving rise to 1st Source's claim occurred in St. Joseph County, Indiana. Moreover, 1st Source and the Defendants have contractually agreed that any litigation between the[m] must be venued in St. Joseph County, Indiana. Further, under 28 U.S.C. § 1391(c)(3), [Neto] may be sued in any judicial district.

         The parties conducted some discovery and attempted to resolve the dispute short of trial: 1st Source filed one document-production request, and Neto traveled to Chicago for a deposition and mediation session related to this dispute and another case not relevant to this appeal. In July 2016, 1st Source filed a substantively similar complaint against Neto in Sao Paolo, Brazil, seeking to recoup the remainder of the debt from the airplane transaction. At the time that 1st Source filed the Brazil lawsuit, Neto maintained certain assets, including the airplane at issue, in Brazil. In October, Neto sought an-tisuit injunctive relief in Indiana district court in an effort to prevent 1st Source from proceeding with the parallel action in Brazil. He argued that § 3.02 of the loan guarantee prohibited 1st Source from bringing suit in Brazil, and that the Brazil litigation was vexatious and duplicative. The district court denied Neto's motion, concluding that § 3.02 allowed for the parallel litigation, and that Neto had not met his burden for showing that the Brazil litigation was vexatious. This appeal followed.

         II. Discussion

         On appeal from decisions on injunctive relief, "[w]e review legal conclusions de novo, findings of fact for clear error, and equitable balancing for abuse of discretion." Korte v. Sebelius,735 F.3d 654, 665 (7th Cir. 2013). "Our review of contract meaning is de novo." Metavante ...


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