7th Circuit denies Brazilian man’s motion for emergency stay

The 7th Circuit Court of Appeals has denied a Brazilian businessman’s motion for an emergency stay while a suit against him is pending in Brazil, finding that the man has failed to provide sufficient information to show that the Brazilian and Indiana suits are duplicative.

In 1st Source Bank v. Joaquim Salles Leite Neto, 17-1058, Joaquim Neto entered into a trust agreement with Wells Fargo Bank in 2009 to purchase an aircraft for his business, borrowing $6 million from 1st Source Bank, pledging the aircraft as collateral and signing a personal guarantee backing the loan. The plane was seized three years later as part of a Brazilian investigation into Neto’s attempt to avoid paying Brazilian import tax. 

Neto continued paying on the plane until December 2014, when 1st Source sued him in the U.S. District Court for the Northern District of Indiana, as well as bringing a second lawsuit against him in Brazil, where the plane resides. Neto moved the district court to enjoin the Brazilian lawsuit on the basis of “vexatious and oppressive” litigation in Brazil, but 1st Source opposed that motion. The district court denied the businessman’s motion, holding that “it (made) perfect sense, from a business standpoint,” for 1st Source to have included a clause in the guarantee allowing it to pursue litigation in any jurisdiction where its collateral was located.

Neto appealed the denial and moved for an emergency injunction pending appeal, but the district court also denied that motion. Neto then appealed to the 7th Circuit Court of Appeals, seeking an emergency stay of his Brazilian proceedings during the U.S. appeal, but that motion was also denied.

On appeal, Neto argued that allowing 1st Source to sue him wherever he has assets would undermine the purpose of a forum selection clause, which is included in the guarantee he signed with 1st Source.

“Neto expresses fear that the district court’s ruling permits 1st Source to sue him all over the world, raising the specter of inconsistent judgments or piecemeal litigation,” 7th Circuit Judge Richard Posner wrote in an explanation of the court’s denial of the emergency stay. “But that specter is insufficiently concrete to warrant an emergency injunction.”

Neto failed to provide sufficient information about the nature of the suit against him in Brazil to support his assertion that it is identical to or duplicative of the Indiana suit, Posner continued. Further, the judge said Neto has neither responded to the bank’s contention that he can ask the Brazilian court to stay the case nor explained why he can’t present a defense to the seizure of the aircraft within 15 days, as allowed by Brazilian procedure. Thus, Neto’s emergency motion for injunction must be denied.


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