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Overlook Gardens Properties LLC v. Orix USA, L.P.
United States Court of Appeals, Eleventh Circuit
June 25, 2019
OVERLOOK GARDENS PROPERTIES LLC, a Georgia limited liability company, CREEKWOOD APARTMENTS, LLC, a Georgia limited liability company, IVERNESS II, LLC, a Georgia limited liability company, GREYSTONE FARMS APARTMENT COMMUNITY, LLC, a Georgia limited liability company, Plaintiffs - Appellees,
ORIX USA, L.P., a Delaware limited partnership, RED CAPITAL GROUP, LLC, a Delaware limited liability company, RED MORTGAGE CAPITAL, LLC, a Delaware limited liability company, RED CAPITAL MARKETS, LLC, a Delaware limited liability company, RED CAPITAL PARTNERS, LLC, an Ohio limited liability company, Defendants - Appellants.
from the United States District Court for the Middle District
of Georgia D.C. Docket No. 4:17-cv-00101-CDL
ED CARNES, Chief Judge, JULIE CARNES and CLEVENGER, [*] Circuit Judges.
CLEVENGER, CIRCUIT JUDGE.
diversity jurisdiction case, the United States District Court
for the Middle District of Georgia remanded the case to the
Georgia state court from which it was removed by the
defendants. This appeal questions our jurisdictional
authority to review the remand order.
Gardens Properties, LLC, Creekwood Apartments, LLC, Inverness
II, LLC, and Greystone Farms Apartment Community, LLC
(collectively, "the Developers") develop
large-scale apartment complexes in Georgia. They finance
their developments using loans federally insured by the
United States Department of Housing and Urban Development
("HUD") through its Multifamily Accelerated
Processing ("MAP") program. They chose Red Mortgage
Capital, LLC as their MAP-approved lender for assistance in
applying for and securing HUD-guaranteed financing through
the MAP program.
Developers each signed an application letter with Red
Mortgage preliminarily agreeing that Red Mortgage has the
exclusive right to fund and service their loans in exchange
for certain fees and compensation. When HUD agreed to insure
the loans, the Developers each signed a commitment letter
with Red Mortgage. In those commitment letters, Red Mortgage
quoted each of the Developers an interest rate that Red
Mortgage allegedly represented was the best rate it thought
it could obtain for the Developers. The Developers then
signed agreements locking in their quoted interest rates. Red
Mortgage worked to secure the quoted interest rates, issued
confirmation letters to the Developers that it secured those
rates, and proceeded to close on the loans based on the
agreed upon terms. At closing, the Developers each executed
with Red Mortgage a note and a security instrument
(collectively, "the loan documents"). In the notes,
the Developers agreed to repay their loans at the interest
rates and on the terms they agreed to in their commitment
letters. In the security instruments, the Developers pledged
their property and rents as collateral against the debt.
commitment letters and the loan documents contain different
forum selection clauses. The commitment letters for three of
the four Developers recite the following forum selection
By its acceptance of the Lender's Commitment, the
Borrower agrees that (a) it was negotiated, made and issued
by the Lender in the State of New York; (b) any action
brought hereunder shall only be brought in the federal or
local courts of Dallas County, Texas; and (c) the rights and
obligations of the parties shall be determined in accordance
with applicable federal law and, to the extent that State law
applies, the law of New York.
Dist. Ct. Dkt. No. ("Doc.") 6-2 at 30, 56-58,
74-75. One of the four Developers-Greystone Farms-signed a
commitment letter containing a substantially similar forum
selection clause, except that it provides the agreement was
made in Ohio, any applicable federal and Ohio law governs,
and any action brought under the letter must be litigated in
the Ohio federal or state courts.
loan documents for all four Developers recite the following
forum selection clause:
Borrower agrees that any controversy arising under or in
relation to this Note or the Security Instrument shall be
litigated exclusively in the Property Jurisdiction
[i.e., Georgia] except as, so long as the Loan is
insured or held by HUD and solely as to rights and remedies
of HUD, federal jurisdiction may be appropriate pursuant to
any federal requirements. The state courts, and with respect
to HUD's rights and remedies, federal courts and
Governmental Authorities in the Property Jurisdiction, shall
have exclusive jurisdiction over all controversies which
shall arise under or in relation to this Note, any security
for the Indebtedness, or the Security Instrument. Borrower
irrevocably consents to service, jurisdiction, and venue of
such courts for any such litigation and waives any other
venue to which it might be entitled by virtue of domicile,
habitual residence or otherwise.
Doc. 11-1 Note at 7.
the commitment letters guarded against inconsistencies
between clauses in the commitment letters and clauses in the
loan documents. The commitment letters state that the terms
of the loan documents supersede the ...