Business owners and professionals who live in other states, such as Pennsylvania, Texas, Alabama, and California often ask why Bankers Healthcare Group can sue them in Onondaga, New York Supreme Court for defaulting on their loans.
After receiving Bankers Healthcare Group’s solicitations for a pre-approved loan, Dr. Warren A. Stiles decided in 2008 to finance the payment of substantial taxes he owed. He was told that he could obtain a commercial loan and use as collateral his Opelika, Alabama medical practice, East Alabama Ear Nose and Throat, P.C. He executed a security agreement granting Bankers Healthcare Group, among other things, “a security interest in all of the right, title and interest of Debtor in” his inventory, instruments, equipment, accounts, fixtures and in ” All Property of Debtor.”
Dr. Stiles renewed the loan in 2012 on what he thought were the same terms as the 2008 loan. He was told that if he failed to sign and return the documents within 24 hours, ” the deal would fall apart.” He read the documents he received by email and signed and returned them as quickly as possible because he again faced a large tax bill. Bankers Healthcare Group loaned Dr. Stiles approximately $331,000 for which he executed a note and personal guaranty for $584,284.68.including principal and interest.
The loan agreement contained a forum-selection clause providing that “venue for any action brought hereunder shall be limited to Onondaga County, New York or Broward County, Florida.” In 2014, Dr. Stiles was notified that due to his failure to satisfy his payment obligations under the loan agreement, Bankers Healthcare Group was filing suit in the agreed-upon forum in Onondaga County, New York. Shortly thereafter, Dr. Stiles and his wife filed a lawsuit against Bankers Healthcare Group in the U.S. District Court for the Middle District of Alabama, alleging that Bankers Healthcare Group had violated disclosure obligations under federal law. They also alleged state law claims of negligence and fraud. Based on the forum-selection clause, Bankers Healthcare Group moved to dismiss the lawsuit and the District Court granted their motion.
On appeal, the U.S. Court of Appeals for the Eleventh Circuit affirmed the U.S. District Court giving a liberal interpretation to the “any action brought hereunder” to include all the claims of Dr. Stiles and his wife, even claims that Dr. Stiles argued fell outside of the loan agreement. The Eleventh Circuit also found that Mrs. Stiles was bound by the forum-selection clause even though she was not officially a party to the loan agreement in 2012. Finally, the Eleventh Circuit affirmed the District Court’s forum non conveniens analysis that the burden is on the Plaintiffs to show dismissal was unwarranted based on the public interest factors, that the interest of justice would be best served by holding the parties to their bargain, and that there were no extraordinary circumstances to override the valid forum-selection clause.
When you sign a loan agreement, make sure that you pay attention to and understand the forum-selection clause.
If you have received a collection notice or are being sued by Bankers Healthcare Group or BHG Financial group, LLC, call our Syracuse, NY law office) at 315.864.5715 or use our contact form to schedule a free, confidential consultation today.