Banco Actinver v. JEMSTEEL — magistrate judge recommends dismissal for lack of personal jurisdiction

Reported / Citable

Background

Banco Actinver sued JEMSTEEL Sales for breach of contract. The contract concerned property in Mexico, and neither party nor the property had an asserted connection to Texas. The agreement selected Texas law and provided that, in actions brought by Banco Actinver, JEMSTEEL would submit to the “jurisdiction of Val Verde County.”

JEMSTEEL moved to dismiss for lack of personal jurisdiction. Banco Actinver relied solely on the forum-selection clause, arguing that JEMSTEEL had consented to suit in federal court. JEMSTEEL responded that the clause referred instead to Val Verde County’s state courts.

The Court’s Holding

Magistrate Judge Matthew H. Watters recommended granting JEMSTEEL’s motion to dismiss because Banco Actinver had not established personal jurisdiction. The recommendation did not constitute a final district-court ruling and was subject to objections and de novo review by the district judge.

Applying Texas contract-interpretation principles, the magistrate judge concluded that “jurisdiction of Val Verde County” means jurisdiction derived from Val Verde County’s court system, not federal jurisdiction. Federal courts derive their authority from the U.S. Constitution and Congress, rather than from the county or State of Texas. Because Banco Actinver offered no other basis for personal jurisdiction, dismissal was recommended.

Key Takeaways

• A clause selecting the “jurisdiction of” a county does not, without more, consent to federal-court jurisdiction.
• The plaintiff bears the burden to establish personal jurisdiction when the defendant moves to dismiss under Rule 12(b)(2).
• Forum-selection language should expressly identify federal court or courts “in” a location if the parties intend to include federal jurisdiction.

Why It Matters

The recommendation illustrates the importance of the distinction between courts “of” a jurisdiction and courts located “in” that jurisdiction. Parties drafting forum-selection clauses should state clearly whether they intend to select state courts, federal courts, or both.