## Facts

- Sailboat Key, Inc., a Florida real estate development corporation, sought financing for a Florida land development project in 1969.
- Continental Mortgage Investors, a Massachusetts business trust engaged in multistate lending, used a Florida-based management firm to originate and recommend loans.
- Continental’s trustees in Boston approved the loan and issued a written commitment dated December 30, 1969.
- The commitment provided for a two-year, $3.5 million loan at 14% interest, secured by the development property, plus additional consideration (including a discount and fees).
- The commitment included a clause stating that Massachusetts law would govern all parts of the loan commitment.
- The loan documents were prepared through Continental’s origination channel, and the closing occurred in Boston on January 22, 1970.
- After a senior lender filed a Florida foreclosure action, Sailboat Key cross-claimed against Continental for usury, and Continental cross-claimed to foreclose its subordinated mortgage.
- The cross-claims were severed, and a special master addressed interest computations.
- The trial court applied Florida usury law, found the transaction usurious, and entered a money judgment for Sailboat Key that included statutory penalties; the district court of appeal affirmed on Florida public policy grounds.

## Issues

1. Whether Florida courts must enforce a contractual choice-of-law clause selecting Massachusetts law for an interstate commercial loan when the loan would be usurious under Florida law but lawful under Massachusetts law.
2. What level of connection between the chosen state and the transaction is required for Florida to give effect to the parties’ choice of law in a usury dispute.

## Decision

- The Florida Supreme Court quashed the district court of appeal’s decision.
- The court held that Massachusetts law governed under the parties’ choice-of-law clause.
- The court ruled that, in an interstate commercial loan implicating usury, Florida will enforce the parties’ chosen law if the chosen jurisdiction has a “normal relationship” (sufficient nexus) to the transaction.
- The court found a sufficient nexus to Massachusetts based on Continental’s organization and operations in Massachusetts and the Boston-based approval and closing.
- The case was remanded for proceedings consistent with applying Massachusetts law, eliminating the Florida usury-based judgment and penalties.

## Legal Principles

- Florida courts will enforce a contractual choice-of-law provision in an interstate commercial loan, even if Florida’s usury limits would be exceeded, when the chosen state has a “normal relationship” or sufficient nexus to the transaction.
- A sufficient nexus may be shown by concrete contacts such as the lender’s organization and principal place of business in the chosen state and meaningful transactional events occurring there (e.g., approval and closing).
- Florida’s policy against usury does not automatically override party-chosen law in a genuinely multistate commercial transaction.
- A choice-of-law clause may be disregarded if the selected law is a sham device lacking real connection and used solely to evade Florida law.

## Conclusion

Florida enforces a foreign choice-of-law clause in an interstate commercial loan that would be usurious under Florida law when the chosen state has a sufficient nexus to the transaction; here, Massachusetts had that nexus, so Massachusetts law applied and the Florida usury judgment was quashed and remanded.


Continental Mortg. Invs. v. Sailboat Key, Inc., 395 So. 2d 507 (Fla. 1981)