Subscriber Benefit
As a subscriber you can listen to articles at work, in the car, or while you work out. Subscribe NowA bank seeking to recoup millions it loaned for a businessman’s purchase of an airplane was entitled to pursue parallel litigation in federal court in Indiana and in Brazil, the 7th Circuit Court of Appeals ruled Monday.
The court affirmed the district court’s denial of the businessman’s motion for antisuit injunctive relief, allowing 1st Source Bank’s lawsuits to move forward in South Bend and in Brazilian courts. Joaquim Salles Leite Neto made almost $3 million in payments on a $6 million loan before he stopped making payments in December 2014, about 18 months after the Brazilian government seized the aircraft, according to the record.
Writing for the court, Circuit Judge Joel Flaum rejected Neto’s arguments that the loan papers he signed stated Indiana was the choice venue for disputes, and that allowing suit to proceed in his home nation of Brazil would deprive him of his day in court and set bad public policy. After all, Neto argued, the case involves an Indiana bank and an Indiana loan guarantee, and permitting duplicate litigation to play out in Brazil would risk inconsistent results.
While it’s true the dispute involves an Indiana bank and loan guarantee, “it also involves a Brazilian defendant, collateral and other assets located in Brazil, and, insofar as this Court is aware, no attachable assets inside Indiana,” Flaum wrote. “It is not unreasonable for a creditor in such a situation to seek to protect its interests by asking loan guarantors to agree to suit in jurisdictions where they hold assets that could be used to satisfy the loan obligations.”
The panel noted that the loan guarantee gave 1st Source such a right in unambiguous language. It “authorized 1st Source to initiate the very litigation Neto seeks to avoid, and 1st Source had legitimate reasons to file suit in Brazil — it wanted to protect its interest in recouping the debt Neto owes by suing in a forum that permits prejudgment attachment of assets,” the court held. “1st Source’s exercise of its contractual rights to protect its interests was a non-vexatious reason for pursuing parallel litigation in Brazil, so antisuit injunctive relief was not appropriate.”
The case is 1st Source Bank v. Joaquim Salles Leite Neto, 17-1058.
Please enable JavaScript to view this content.