Lack of Personal Jurisdiction – Breach of Contract Action by Broker for Failure to Pay a Commission on Aircraft Sale

In Corporacion Aero Angeles, S.A. v. Fernandez, 69 So. 3d 295 (Fla. 4th DCA 2011), the plaintiff, Jamie Gaston Fernandez (“Fernandez”) brought an action for breach of contract arising out an oral brokerage agreement for the sale of a jet owned by Aero Angeles, a Mexican corporation (“Aero”).  Fernandez claimed that he was not paid a commission in connection with the sale, and filed suit seeking damages.  Aero contended that it did not enter into a contract with him to pay a commission.  The aircraft in question was a Falcon 900B jet; it was Aero’s only asset according to Antonio Ortiz Palero (“Palero”), the general director of Aero, and the pilot of the aircraft.  The jet was used primarily for personal use, and was headquartered in Mexico.  It was never offered for charter flights to Florida or for Florida residents.  Palero testified that the company had no business in Florida, and nor did it have employees, offices, phone listings, bank accounts, leases or sales in Florida.  The entity furthermore did not do business in Florida, nor did it have an agent in Florida for service of process. 

When the owner of Aero decided to buy a new aircraft, he directed Palero to sell the Falcon.  Palero contacted Fernandez about selling the aircraft.  The testimony indicated that Aero would not pay a commission, nor would it engage an exclusive broker, but instead the owner expected a certain price, and the broker could keep anything received over that price.

Fernandez testified that he approached several buyers in Florida and advertised the plane in national magazines.  He received one offer that was rejected, and received another call thereafter from Canadian clients.  The buyers viewed the plane in Mexico and placed a $500,000 deposit held by an Oklahoma escrow agent.  Palero met with the Canadian clients in Montreal and worked out a contract.  Thereafter, Palero accepted a purchase price of $18,575,000, and the $575,000 was to be for Fernadez or the other brokers involved.  The sale closed in Canada, and neither party paid Fernandez a commission. 

Several years later, Fernandez sued Aero.  Aero moved to dismiss for lack of personal jurisdiction, and an evidentiary hearing was held.  After the hearing, the court determined that there were sufficient contacts to provide jurisdiction.  Aero appealed the determination of jurisdiction.

On appeal, the court reversed the finding of jurisdiction.  Applying the two prong test set forth in Venetian Salami Co. v. Parnethais, 554 So. 2d 499 (Fla.1989), the appellate court found that the first prong bringing the action within Florida’s long arm statute had been satisfied; in a breach of contract action, where no place of payment is designated, the payment is presumed to be made at the residence of the creditor which in this case was Florida. 

The second prong of Venetian Salami which required sufficient minimum contacts, was however, not satisfied.  To satisfy minimum contacts, a defendant’s contacts (1) must be related to plaintiff’s cause of action or have given rise to it, (2) must involve some act by which defendant has purposefully availed itself of the privilege of conducting activities within this forum, and (3) the defendant’s contacts with the forum must be such that the defendant should reasonably anticipated being haled into court there.

According to the appellate court’s findings, none of these criteria were met.  While the trial court determined that a contract existed to sell the plane to Canadian buyers, the trial court did not determine that Aero gave Fernandez an exclusive listing agreement.  Aero’s contacts with Florida in relation to the sale of the plane to Canadian buyers were non-existent.  Neither the plane, the owner, nor even Palero came to Florida in connection with the sale.  No contract was delivered in Florida; no closing took place in Florida, and no deposit was escrowed in Florida.  The determination of jurisdiction was accordingly reversed, with directions to dismiss the cause for lack of jurisdiction.

Jurisdictional disputes of this kind often lead to lengthy and complicated legal battles, at times even involving extensive jurisdictional discovery.  The attorneys at Schecter Law are experienced in this field, and can assist you whether you are a non-resident of Florida seeking to resist personal jurisdiction, or whether you are seeking to impose personal jurisdiction over a non-resident defendant in Florida state courts.

A choice-of-law clause in a contract is a provision that designates the law that will govern any disputes between the contracting parties.  Including a choice-of-law clause in a contract where parties are located in different states, or even different countries, can minimize the uncertainty associated with any potential litigation with respect to the contract, and the substantive law governing the parties.

In Florida, a choice-of-law provision in a contract selecting the substantive law of another jurisdiction is presumed valid until it is proved invalid; the party who seeks to prove such a provision invalid bears the burden of proof.   Generally, Florida courts will enforce choice-of-law provisions unless the law of the chosen forum contravenes strong public policy. This rule is premised on the presumption that choice-of-law provisions are valid unless the party seeking to avoid enforcement of them sufficiently carries the burden of showing that the foreign law contravenes strong public policy of the forum jurisdiction.  The term “strong public policy” means that the public policy must be sufficiently important that it outweighs the policy protecting freedom of contract.  Thus, routine policy considerations are insufficient to invalidate choice-of-law provisions in a contract.  The countervailing public policy must be fundamental and strong enough to outweigh the policy protecting the expectations of contracting parties. 

Choice-of-law clauses can often be deemed applicable to tort claims; when determining whether or not a choice-of-law provision in a contract also governs such tort claims between the contracting parties, a court must examine the scope of the provision itself.  A choice-of-law provision that is narrow relates only to the agreement and will not encompass tort related claims.  For example, a provision providing that an agreement shall be governed and construed in accordance with the laws of a certain jurisdiction will be construed narrowly as it purports to govern only that agreement.  On the other hand, a choice-of-law provision that is broad in its wording can encompass certain tort claims.  For example, a clause indicating that all disputes arising out of or in connection with the agreement are to be construed in accordance with the laws of a certain jurisdiction would be deemed sufficiently broad to encompass tort claims between the contracting parties. 

Finally, it is important to note that a choice-of-law provision will not apply to actions that arose prior to the date of the agreement containing the choice-of-law provision. 

Choice-of-law analysis is crucial to any case where the contract contains a provision selecting the substantive law of another state, and such a clause can have a great effect on the substantive aspects of the case.   Choice-of-law analysis is burdened with several nuances and intricacies that require the skill and expertise akin to those of one of our experienced attorneys at Schecter Law.