Summary
The Eighth Circuit held that a Hong Kong limited company is treated as a corporation under 28 U.S.C. § 1332 for diversity jurisdiction purposes, applying the Seventh Circuit’s equivalence test (perpetual existence, right to contract, limited liability, transferable shares). The court also interpreted a loan agreement’s provision requiring the borrower to pay “all costs and expenses” in connection with enforcement to include attorneys’ fees, reversing the district court’s contrary ruling. This case addresses diversity jurisdiction for foreign entities and contractual interpretation of fee-shifting clauses.
Topics
Practice areas
Questions Presented
- Whether a Hong Kong limited company is a corporation under 28 U.S.C. § 1332(c)(1) for diversity jurisdiction purposes.
- Whether the attorneys' fee provision in the loan agreement requires JMG to pay Jet Midwest International's attorneys' fees incurred in enforcing the agreement.
Holdings
- A Hong Kong limited company is a corporation under § 1332(c)(1) because it is equivalent in all legally material respects to a U.S. corporation.
- The phrase 'all costs and expenses' in the enforcement sentence includes attorneys' fees, as the sweeping language reflects the parties' intent to include such fees.
Key quotations
“We conclude that a Hong Kong limited company is equivalent to a U.S. corporation under § 1332.”
“Despite differences in wording between the two sentences at issue in Section 9.2, we conclude that the phrase 'all costs and expenses' should be construed consistently in both cases as including attorneys' fees.”
“The use of the sweeping language 'all costs and expenses' reflects the parties' intent that JMG would pay Jet Midwest International's attorneys' fees and other costs for enforcing as well as preparing the agreement.”
“Baltimore Nat. Bank v. State Tax Comm'n of Md., 297 U.S. 209, 212 (1936) ('In such a situation the burden is heavily on the suitor who would subject the word "all" with its uncompromising generality to an unexpressed exception.')”
Factual background
Jet Midwest International Co., Ltd. and Jet Midwest Group, LLC entered into a loan agreement. After a dispute, Jet Midwest International sued JMG for breach. The district court granted summary judgment to Jet Midwest International. The loan agreement contained a provision requiring JMG to pay 'all costs and expenses' for both preparation and enforcement of the agreement, with a $20,000 cap on preparation costs. The agreement was governed by Hong Kong law. Jet Midwest International then moved for attorneys' fees incurred in enforcing the agreement, which the district court denied.
Procedural history
Jet Midwest International sued JMG for breach of a loan agreement. The district court granted summary judgment to Jet Midwest International, then denied its motion for attorneys' fees. Jet Midwest International appeals the denial of fees.
Remand instructions
Remand for consideration of an appropriate award of attorneys' fees.