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Cita Trust Company AG v. Fifth Third Bank

United States Court of Appeals, Eleventh Circuit

January 16, 2018

CITA TRUST COMPANY AG, a Switzerland Corporation, Plaintiff - Appellant,
FIFTH THIRD BANK, an Ohio banking corporation, Defendant-Appellee.

         Appeal from the United States District Court for the Middle District of Florida D.C. Docket No. 8:15-cv-02775-MSS-TBM

          Before MARCUS, MARTIN, and NEWSOM, Circuit Judges.

          MARCUS, Circuit Judge.

         In this commercial contract dispute, filed in federal court based on diversity jurisdiction, 28 U.S.C. § 1332, Cita Trust Company AG appeals the district court's dismissal of its complaint against Fifth Third Bank. In 2011, Cita contracted for Fifth Third to take custody of around $428 million worth of bonds owned by Cita. In 2013, Fifth Third sent the bonds to a third party. And in 2015, Cita sued Fifth Third, claiming that this transfer was in breach of the custody contract, negligent, and in violation of Fifth Third's fiduciary duty.

         Fifth Third moved to dismiss Cita's complaint, claiming that it was filed outside of the contract's one-year limitation period for filing any action between the parties. In response, Cita did not contest that the suit was untimely under that provision but instead argued that the provision was unconscionable and should not be enforced. In the conclusion of its response -- but nowhere else -- Cita alternatively asked the court to dismiss the complaint without prejudice so that it could file an amended complaint. The district court concluded, however, that the provision was not unconscionable and thus that the suit was untimely. At no time did Cita move the district court for leave to file an amended complaint, nor did it advise the court about the substance of what it would have included in the amendation.

          On appeal, Cita argues that the district court erred in enforcing the contractual one-year limitation period, and that the trial court abused its discretion by not granting leave to amend the complaint. After careful review, and with the benefit of oral argument, we conclude that these arguments are without merit and affirm the judgment of the district court.


         On January 13, 2011, Cita, a Swiss trust, entered into a Custody Services Agreement ("Agreement") with Fifth Third, an American bank. The fifteen-page Agreement provided that Fifth Third would take custody of certain bonds belonging to Cita -- 428 million units of CUSIP G5722UAA0, known as Luxor bonds, worth $428 million -- hold them for safekeeping, and provide certain ancillary services, in return for which Cita would pay Fifth Third $90, 000 per year. Cita then activated a Global Securities account with Fifth Third into which the bonds were transferred. The bonds were then moved from the U.K. market to Euroclear, an international securities depository. Over the next two years, Cita received bank statements from Fifth Third showing that the bonds remained in its account.

         Sometime in August 2013, Fifth Third removed the Luxor bonds from Cita's account without notice or warning. In September 2013, Euroclear indicated it would no longer report the balance of Luxor bonds; the bonds were also delisted from the London Stock Exchange. On September 20, 2013, a Fifth Third private-wealth banker and a corporate representative met with Cita and informed it that Fifth Third had sent Cita's bonds back to the original issuer. Around this time, Cita received notice from Fifth Third that it could no longer reflect the Luxor bonds as a holding in Cita's account since the bonds were no longer "a book-entry eligible asset through Euroclear." Cita objected to Fifth Third taking any action regarding the bonds because the bonds had only been delisted, not devalued or canceled.

         On December 2, 2015 -- more than two years after Fifth Third informed Cita that it had sent the Luxor bonds to a third party -- Cita sued Fifth Third in the United States District Court for the Middle District of Florida. The complaint leveled three claims against Fifth Third: (1) breach of contract for failure to maintain custody of the Luxor bonds; (2) negligence for failing to adequately safeguard the bonds; and (3) breach of fiduciary duty for "willfully, wrongly, and in bad faith" failing to take appropriate measures to safeguard the bonds.

         Fifth Third moved to dismiss Cita's complaint, urging the court that the claims were untimely. Fifth Third pointed out that the parties' Agreement contained a clause expressly stating that "Customer shall bring no cause of action, regardless of form, more than one year after the cause of action arose." The Agreement also included a choice-of-law provision that specified Ohio law as the governing law, and Fifth Third argued that under Ohio law this contractual limitation period was enforceable. Because this suit was brought in Florida, Fifth Third also noted that the Eleventh Circuit "has recognized that shortened limitation periods in a contract construed under the laws of a state which allow for them are valid and enforceable in Florida."

         Cita argued, however, that the contractual limitation period was unconscionable and unenforceable. In the concluding sentence of its response, Cita asked the district court, if it were to grant the motion to dismiss, to do so "without prejudice" in order to allow Cita to amend its complaint.

         The district court dismissed Cita's claims as untimely. The court explained that the parties chose Ohio law to govern the Agreement and that the Agreement's one-year limitation period was enforceable under Ohio law because the limitation period was (1) clear and unambiguous, and (2) reasonable under the facts of the case. The trial court also concluded that Florida law provided no barrier to applying Ohio law in this suit because Ohio law did not contravene Florida public policy. It then found that Cita was aware of Fifth Third's alleged misconduct no later than September 2013 and thus that Cita's complaint, filed in December 2015, fell outside the one-year limitation period. Accordingly, the district court granted Fifth Third's motion to dismiss with prejudice and directed the clerk to terminate any pending motions.

          Cita now appeals the district court's enforcement of the contractual limitation period and the court's implicit ...

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