Opinion
Civil Action Number 03-2682 Section "L" (3).
January 18, 2005
ORDER REASONS
Pending before the Court are: (1) the Motion of defendants, David J. Jones, Jimmy Winemiller, Monterrey Farms, Inc. and AB Farms, Inc., for Review of and Objections to Magistrate Judge's Order and Reasons Granting in Part and Denying in Part Plaintiffs' Motion to Compel; (2) the Motion of defendant, Bottle Rock Power Corp., to Quash Service of Process; and to Dismiss for Lack of Personal Jurisdiction, Insufficiency of Service of Process and Improper Venue; or Alternatively to Transfer to Proper or More Convenient Venue; (3) the Motion of defendant, IPIC Int'l Inc. by and through its receiver, Dennis L. Roossien, Jr. to Dismiss for Lack of Personal Jurisdiction, or in the alternative, Motion to Dismiss or Transfer Venue; and (4) the Motion of defendants, David J. Jones, Jimmy Winemiller, Monterrey Farms, Inc. and AB Farms, Inc. to Dismiss for Improper Venue, or alternatively to Transfer to Proper (Venue), or further alternatively, to More Convenient Venue. Motions (2) through (4) came
I. BACKGROUND
On September 23, 2003, the Plaintiffs [Louisiana citizens] filed suit in the Eastern District of Louisiana against the Defendants. The suit arises from a loan agreement. The Plaintiffs loaned Defendants Bottle Rock Power Corporation ("Bottle Rock Power") [California corporation], David Jones [Arkansas citizen], and Jimmy Winemiller [Tennessee citizen], $1,500,000 to enable them to purchase a California geothermal power plant from the State of California. Bottle Rock Power acquired the power plant on August 23, 2001. The loan was evidenced by a promissory note dated June 27, 2001 and signed by Bottle Rock Power, Jones, and Winemiller. The principal and interest due on the note was due and payable on July 26, 2001 at the Whitney Bank in New Orleans, Louisiana. In addition, on August 23, 2001, Plaintiff Monroe posted a $5,000,000 letter of credit in favor of Greenwich Insurance Company ("Greenwich"), which was used to secure a bond for the purchase of the California power plant. The letter of credit was issued by Whitney National Bank in New Orleans, Louisiana. On April 19, 2002. Defendants Monterey Farms [Arkansas corporation] and AB Farms [Arkansas Corporation], which Monroe alleges were owned by Jones and Winemiller, acquired the stock of Bottle Rock Power Corporation and agreed to cause Greenwich to have the Monroe letter of credit released upon sale of the stock so that Monroe would no longer be responsible for the letter of credit, to pay Monroe for transaction costs with Whitney Bank, and to pay Monroe $1,000,000 as compensation for providing the letter of credit.
The Plaintiffs allege that Monterey Farms and AB Farms sold the stock of Bottle Rock Power in May of 2003, failed to release the Plaintiffs' letter of credit, and then failed to fully pay amounts due on the note. The Plaintiffs now bring suit against Bottle Rock Power, David Jones, and Jimmy Winemiller under the terms of the promissory note, alleging that those defendants paid the principal due on the note but still owe $4,446,439.05 on interest, plus attorney's fees. The Plaintiffs also sue Monterey Farms and AB Farms for breach of the agreement to release the letter of credit and to pay Monroe's transaction costs.
Plaintiffs allege that they are owed $37,733,333 in transaction costs, but admit that Defendants have paid the $1,000,000 compensation fee for providing the letter of credit.
The Plaintiffs have also brought suit against Defendants Bottle Rock Holdings Corp. ("Bottle Rock Holdings") [Delaware Corporation] and [PIC International ("IPIC") [Nevada Corporation with principal place of business in California] for failure to have the letter of credit released based on a separate agreement signed on July 22, 2003 after Bottle Rock Holdings acquired the Bottle Rock Power stock from Defendants Monterey Farms, Inc. and/or AB Farms, Inc. Under the terms of this separate agreement, the Plaintiffs contend that Monroe agreed to extend the letter of credit for thirty (30) days in exchange for Bottle Rock Holdings' and IPIC's agreement to have the letter of credit released and to pay Monroe's out of pocket expenses incurred as a result of the extension. When Bottle Rock Holdings and IPIC allegedly breached their agreement to have the Monroe letter of credit released, the Plaintiffs brought suit against them. The Plaintiffs also bring an unjust enrichment claim against all of the Defendants.
IPIC was served through its agent for service on November 3, 2003, and on December 17, 2003, IPIC filed a motion to stay litigation. The parties entered into an Agreed Order on January 27, 2004 to stay the lawsuit as to Defendants Bottle Rock Holdings, Bottle Rock Power, and IPIC only until April 1, 2004. The Agreed Order also provided that IPIC would update Monroe periodically on the status of its investigation concerning Bottle Rock Power's plant, the ownership of Bottle Rock Power and Bottle Rock Holdings, and any settlement negotiations.
II. MOTION OF DEFENDANTS, DAVID J. JONES, JIMMY WINEMILLER, MONTERREY FARMS, INC. AND AB FARMS, INC., FOR REVIEW OF AND OBJECTIONS TO MAGISTRATE JUDGE'S ORDER AND REASONS GRANTING IN PART AND DENYING IN PART PLAINTIFFS' MOTION TO COMPEL
Pursuant to 28 U.S.C. § 636(b)(1)(A), Federal Rule of Civil Procedure 72(a), and Local Rule 74.1E. Defendants Jones, Winemiller, Monterrey Farms, and AB Farms (collectively, "the Arkansas Defendants") move for review of and to object to the Order and Reasons issued by Magistrate Judge Knowles on April 2, 2004, granting in part and denying in part Plaintiff's Motion to Compel. On February 2, 2004, the Arkansas Defendants filed a Motion to Dismiss, arguing that their contacts with Louisiana are not sufficient for personal jurisdiction. In response, the Plaintiffs served the Arkansas Defendants with requests for production of documents. The parties agreed that those requests were solely limited to documents relevant to the jurisdictional and venue issues raised in the Arkansas Defendant's Motion to Dismiss. The Arkansas Defendants timely objected and responded to the Plaintiffs' production request on March 11, 2004. However, on March 18, 2004, the Plaintiffs filed a motion to compel, claiming that the Plaintiffs never received from the Arkansas Defendants all of the non-objectionable documents nor a complete log of documents being withheld by counsel for the Arkansas Defendants. On March 31, Magistrate Knowles heard oral argument on the Plaintiffs' motion to compel and granted the motion in large part, denying only the portions of the Plaintiffs' motion regarding documents retained by Bottle Rock Power's counsel and regarding the Plaintiffs' claim of waiver.
Magistrate Knowles concluded that this portion of the Plaintiffs' motion to compel should have been directed to Bottle Rock Power or to its attorney, James Hagan.
Magistrate Knowles held that Arkansas Defendants did not waive their attorney-client privilege by failing to provide a log of privileged documents to the Plaintiffs.
The Arkansas Defendants claim that the Magistrate's Order is based on several findings of fact that are clearly erroneous and regard issues not presented to the Magistrate for determination and for which the Plaintiffs produced no evidence. Furthermore, the Arkansas Defendants object to the Magistrate's determination that the Plaintiffs are entitled to broad discovery regarding the contacts that the wives of the Arkansas Defendants have with Louisiana. The Arkansas Defendants claim that, because the wives are not parties to the suit, those contacts are not relevant to the Arkansas Defendants' motion to dismiss for lack of personal jurisdiction. Therefore, the Arkansas Defendants reason that the Magistrate's determination is contrary to the law.
The Plaintiffs respond that the Arkansas Defendants' objections to the alleged factual findings made by the Magistrate are unfounded. Firstly, the Plaintiff's argue that the Magistrate Judge did not intend to make any factual findings in the order, but was merely reciting the allegations as set forth in the Plaintiffs' motion to compel and complaint. Secondly, the Plaintiff's contend that information regarding the Arkansas Defendants' wives' Louisiana contacts are relevant because it is reasonable to believe that such information may lead to the discovery of admissible evidence regarding the Louisiana contacts of the Arkansas Defendants, which is relevant to the issue of personal jurisdiction. The Plaintiffs claim that the decision to loan to the Arkansas Defendants and to post the letter of credit was made in reliance upon financial statements indicating that both Jones and Winemiller jointly owned with their respective wives extensive land and entities located in Louisiana. However, in their depositions, Jones and Winemiller testified that all of the significant assets were separately owned by their wives. The Plaintiffs believe that they are entitled to documents related to the wives' contacts in order to assess whether those documents truly only relate to the wives individually, or whether the wives were acting as agents for Jones and Winemiller.
Additionally, the Plaintiffs maintain that the Arkansas Defendants still have not produced all of the responsive documents as the Magistrate ordered. The Plaintiffs believe that the refusal to produce the documents is a delay tactic being employed by the Arkansas Defendants to the prejudice of the Plaintiffs. The Plaintiffs request that the Court order the Arkansas Defendants to immediately produce all responsive documents. Furthermore, the Plaintiffs wish for the Court to immediately make the Arkansas Defendants available for deposition regarding such documents in New Orleans at their costs.
ANALYSIS
Title 28, Section 636(b)(1)(A) of the United States Code provides that "[a] judge of the court may reconsider any pretrial matter [designated to a magistrate judge] where it has been shown that the magistrate judge's order is clearly erroneous or contrary to law. The "clearly erroneous" standard is quite deferential to the Magistrate and requires the District Court to have a "definite and firm conviction that a mistake has been committed." Concrete Pipes and Products of California, Inc. v. Construction Laborers Pension Trust for Southern California, 508 U.S. 602, 622 (1993), citing, United States v. United States Gypsum Co., 333 U.S. 364 (1948). Upon reviewing the Magistrate's Order and Reasons, it is evident that Magistrate Knowles' Order was neither clearly erroneous nor contrary to law.
Firstly, the Magistrate was not clearly erroneous in making findings of facts that were either beyond the scope of the Magistrate's authority or unsupported by the evidence. Many of the "facts" that the Arkansas Defendants allege were found by Magistrate Judge Knowles are found in the "Background" section of the Magistrate's April 2, 2004 Order and Reasons. These "facts" are clearly intended to summarize the Plaintiffs' version of events, which is evident by the Magistrate's use of qualifying phrases, such as "According to the plaintiffs" and "Plaintiffs claim that." When the Magistrate does not use such qualifiers, the "facts" are clearly attributed to the Plaintiffs through the use of footnote citations to the Plaintiffs' complaint or to the Plaintiffs' motion to compel. Therefore, it is evident that these "facts" merely serve as a background summary of the Plaintiffs' case and are not factual findings designed to resolve any disputed issues that are dispositive of the Plaintiffs' claims or the Arkansas Defendants' defenses. Even the "findings of fact" to which the Defendants point that are not in the "Background" section of the Magistrate's Order are not clearly erroneous findings because they are assertions that are based on and supported by the statements given in the complaint, motions, and memoranda presented to the Magistrate. The Magistrate heard oral argument presented by both sides, weighed the parties' positions, and made determinations for which there are no clear errors that would lead this Court to firmly believe a mistake has been committed.
Secondly, it was not contrary to law for the Magistrate Judge to find that the Arkansas Defendants' wives' contacts with Louisiana are properly the subject of jurisdictional discovery. The Magistrate's Order explicitly states that the Magistrate's conclusion is not "an advisory opinion on the imputability of any such contacts." (April 2, 2004 Order and Reasons, p. 16). Rather, the Magistrate explains that "it is for the district judge to determine the imputability of any contacts and the merits of the motion to dismiss." (Id.). Therefore, the Magistrate's determination that the wives' Louisiana contacts are discoverable was not a finding that those contacts ultimately will be imputed to the Arkansas Defendants. The Magistrate merely concluded that the wives' contacts may lead to the discovery of evidence relevant to personal jurisdiction over the Arkansas Defendants. "Relevancy is broadly construed and a request for discovery should be considered relevant if there is any possibility that the information sought may be relevant to the subject matter in the action or if there is any possibility that the information sought may lead to the discovery of admissible evidence." Garcel, Inc. v. Hibernia Nat. Bank, 2002 WL 100605 at *2 (E.D. La. 2002); see also Fed.R.Civ.P. 26(b)(1). Courts have recognized that, though discovery rules are to be broadly applied, courts should not allow discovery to be a boundless fishing expedition. Garcel, 2002 WL 100605 at *2. However, in this case, the Magistrate determined that the Plaintiffs' request for the wives' contacts with Louisiana was reasonably calculated to lead to the discovery of admissible evidence. Consequently, it was not contrary to the law for the Magistrate to rule that such information is discoverable.
III. MOTION OF DEFENDANT, BOTTLE ROCK POWER CORP., TO QUASH SERVICE OF PROCESS; AND TO DISMISS FOR LACK OF PERSONAL JURISDICTION, INSUFFICIENCY OF SERVICE OF PROCESS AND IMPROPER VENUE; OR ALTERNATIVELY TO TRANSFER TO PROPER OR MORE CONVENIENT VENUE
Defendant Bottle Rock Power appears specially for the purpose of moving the Court to quash Plaintiffs' service of process and to dismiss the Plaintiffs' complaint pursuant to Federal Rule of Civil Procedure 12(b)(2) for lack of personal jurisdiction, pursuant to Fed R. Civ.P. 12(b)(5) for insufficiency of service of process, and pursuant to Fed.R.Civ.P. 12(b)(3) and 28 U.S.C. § 1406(a) for improper venue. Alternatively, the Defendant Bottle Rock Power moves the Court to transfer the case to a proper venue pursuant to 28 U.S.C. § 1406(a) or to a more convenient venue pursuant to 28 U.S.C. § 1404(a). Bottle Rock Power is a California corporation that denies that it has transacted business with the Plaintiffs in Louisiana, as the Plaintiffs allege. Therefore, Bottle Rock claims that this Court does not have personal jurisdiction over the corporation. Bottle Rock Power also claims that it has never been properly served with process in this case. Furthermore, Bottle Rock Power contends that the Northern District of California is the proper venue because a substantial part of the events and real property giving rise to the Plaintiff's claims occurred in that district.
Each of the Defendants have moved to transfer this case to the Northern District of California as a more convenient venue. Therefore, rather than focusing on the transfer arguments of each defendant separately, the Court discusses transfer of the entire case to a more convenient venue in Section VI of this Order Reasons.
The Plaintiffs respond that jurisdiction and venue are proper because of Bottle Rock Power's many contacts with Louisiana regarding the promissory note payable in New Orleans and the letter of credit issued by Whitney National Bank in New Orleans, and the contact with Louisiana made by Bottle Rock Power's shareholder, Jimmy Winemiller, its attorney, James Hagan, and its agent, Arlie Beane. Furthermore, the Plaintiffs assert that venue should not be transferred because Bottle Rock Power has not clearly and convincingly shown that another venue would be more convenient. The Plaintiffs also argue that service was sufficiently made upon Ronald E. Suess, the current president of Bottle Rock Power, who was the agent for service of process for Bottle Rock Power at the time the Complaint was served upon him.
ANALYSIS
A. Personal Jurisdiction
"When a nonresident defendant moves to dismiss for lack of personal jurisdiction, the plaintiff bears the burden of establishing the district court's jurisdiction over the nonresident." Jobe v. ATR Marketing, Inc., 87 F.3d 751, 753 (5th Cir. 1996); Dickson Marine Inc. v. Panalpina, 179 F.3d 331, 336 (5th Cir. 1999). Therefore, the Plaintiffs must demonstrate that the law of Louisiana provides for the assertion of jurisdiction over a nonresident defendant and that the assertion of in personam jurisdiction is consistent with the Fourteenth Amendment Due Process Clause. Id. (setting this forth as the two-step inquiry that applies to a federal diversity suit). The first prong of the Plaintiffs' burden is easily satisfied by the Louisiana long-arm statute, La.R.S. 13:3201(B), which allows a court of Louisiana to "exercise personal jurisdiction over a nonresident on any basis consistent with the constitution of [Louisiana] and of the Constitution of the United States." However, the Plaintiffs and Bottle Rock Power disagree on whether subjecting Bottle Rock Power to suit in Louisiana would violate the dictates of the Due Process Clause of the Fourteenth Amendment.
For this Court to exercise personal jurisdiction over Bottle Rock Power without reaching beyond the limits of due process, Bottle Rock must have sufficient "minimum contacts" with Louisiana such that the maintenance of the Plaintiffs' suit does not offend "traditional notions of fair play and substantial justice." Helicopteros Nacionales de Colombia v. Hall, et al., 466 U.S. 408, 413-414 (1984); see also International Shoe Co. V. Washington, 326 U.S. 310, 316. Minimum contacts are established through either specific jurisdiction or general jurisdiction. See Helicopteros, 466 U.S. at 414-415, nn. 8-9. Specific jurisdiction exists when a court exercises personal jurisdiction over a defendant in a suit arising out of or related to activities that the defendant has purposefully directed at residents of the forum state. Aviles v. Kunkle, 978 F2d 201, 204 (5th Cir. 1992); See Helicopteros, 466 U.S. at 414, n. 8; See also Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475 (1985). Where specific jurisdiction does not exist, a court may still exercise general jurisdiction over a defendant if the defendant's contacts with the forum are "continuous and systematic." Dickson Marine, 179 F.3d at 336; Gardemal v. Westin Hotel Co., 186 F.3d 595 (5th Cir. 1999); See Helicopteros, 466 U.S. at 414-15, n. 9. Furthermore, in determining whether the traditional notions of fair play and substantial justice are offended, the Court must look at whether the assertion of jurisdiction by a Louisiana court is reasonable. See Asaht Metal Indus. Co. v. Superior Court, 480 U.S. 102 (1987).
The Plaintiffs have satisfied their burden of showing that this Court can exercise specific jurisdiction over Bottle Rock Power. First, for there to be specific jurisdiction, there must be "some act by which the defendant purposefully avails itself of the privilege of conducting activities within the forum state, thus invoking the benefits and protections of its laws." Dickson Marine, 179 F.3d at 337, quoting, Hanson v. Denckla, 357 U.S. 235, 253 (1958). The Plaintiffs argue that this requirement is met because the loan, promissory note, and letter of credit at issue were all created on Bottle Rock Power's behalf and paid by Monroe, a Louisiana citizen, through Whitney National Bank in New Orleans. The Defendants correctly assert that an agreement or contractual relationship between a nonresident defendant and a Louisiana resident does not automatically establish sufficient minimum contacts. Dickson Marine, 179 F.3d at 337; Burger King, 471 U.S. at 478. However, when there is an actual written contract, the Court "must look to prior negotiations, contemplated future consequences of the agreement, and the actual course of dealing between the parties to determine if minimum contacts existed." Dickson Marine, 179 F.3d at 337.
Though the Plaintiff's claims against Bottle Rock Power do not include a failure to release the letter of credit, the letter of credit was negotiated on Bottle Rock Power's behalf.
The loan made by Monroe to Bottle Rock was evidenced by a promissory note, which Bottle Rock agreed to repay at the Whitney National Bank in New Orleans. (Plaintiffs' Exhibit A-4). Monroe arranged for the $1,500,00 loan to be wired to Bottle Rock, Winemiller and Jones from Whitney National Bank in New Orleans to the trust account of their attorney, James Hagan. (Plaintiffs' Exhibit A, Affidavit of Robert J. Monroe, ¶ 11). Furthermore, in his deposition, James Hagan, counsel for Bottle Rock, admitted that he traveled to New Orleans to meet with Monroe and Mr. Page, a Whitney bank representative, to discuss the means by which the note would be paid. In addition to these numerous dealings with the forum state, Mr. Winemiller also visited New Orleans, and both he and Mr. Hagan placed numerous phone calls to Monroe in New Orleans to discuss the loan. (Plaintiffs' Exhibit A, Affidavit of Robert J. Monroe). Bottle Rock argues that it received the loan funds in California and that it signed the promissory note in California and faxed it back to the State of Arkansas. However, "[a]s to the promissory [note] signed elsewhere, the fact that the contract was not executed or finalized in Louisiana is not controlling, nor is it dispositive of the issue of personal jurisdiction." Asean Homes, Inc. v. Miller, 1999 WL 1102427 at *4 (E.D. La. 1999). When the circumstances surrounding the agreements between Bottle Rock and Monroe are viewed in their entirety, it is evident that Bottle Rock purposefully availed itself of the privilege of conducting activities within Louisiana.
For there to be specific jurisdiction, the second requirement is that the Plaintiffs' cause of action must arise out of the Defendant's contacts with Louisiana. The Plaintiffs easily meet this requirement. All of Bottle Rock's contacts with Louisiana were in reference to either the promissory note evidencing the loan or the letter of credit. The Plaintiffs' claim arises out of Bottle Rock's alleged failure to fully repay the note to Whitney Bank in New Orleans. Though the Plaintiffs many not be able to demonstrate the Bottle Rock Power had the continuous and systematic contacts with Louisiana necessary for general jurisdiction, the Plaintiff's claim clearly arises out of Bottle Rock's purposeful and direct contact with Louisiana. Therefore, Bottle Rock Power has the minimum contacts with Louisiana that are necessary for this Court to exercise specific jurisdiction.
With minimum contacts established, the Court must determine whether the assertion of personal jurisdiction over Bottle Rock is reasonable and comports with traditional notions of "fair play and substantial justice." International Shoe, 326 U.S. at 326. To determine whether this requirement is met, the Court should consider the following factors: (1) the burden upon the nonresident defendant; (2) the interest of the forum state; (3) the Plaintiffs interest in securing relief: (4) the interstate judicial systems interest in obtaining the most efficient resolution of the controversies' and (5) the shared interest of the several states in furthering fundamental substantive social policies. Allfred v. Moore Peterson, 117 F3d 278, 286, n. 7 (5th Cir. 1997); Bullton v. Gillespie, 895 F.2d 213, 216, n. 5 (5th Cir. 1990). The State of Louisiana undoubtedly has an interest in protecting its residents. Likewise, the Plaintiffs and the interstate judicial system have an interest in litigating claims where the injuries occur and where the Plaintiffs are domiciled. Asean Homes, Inc., 1999 WL at *4. Monroe is a Louisiana resident who was allegedly injured in Louisiana by the Defendant's failure to pay the note and release the letter of credit that were both issued by a Louisiana bank. Bottle Rock claims that it would be burdened if this case were in Louisiana because it may be unable to defend itself in a Louisiana court due to the expense of litigation. However, Bottle Rock has been willing to send agents to New Orleans in its negotiations with Monroe. "Defending a suit is a burden to any defendant." Id. The burden that would be imposed upon Bottle Rock in this case would not be unreasonable given that Bottle Rock has sent representatives to New Orleans in its negotiations for the loan and letter of credit. Furthermore, the financial institution involved is located in Louisiana. In this case, the Plaintiffs have established that it would not be unreasonable for Bottle Rock Power to be called into court in Louisiana. Therefore, this Court has jurisdiction over the person of Bottle Rock Power Corporation.
B. Insufficiency of Service of Process
Bottle Rock Power first argues that service of process is void because this Court lacks personal jurisdiction over Bottle Rock Corporation. However, this argument fails because the Court has concluded that it does have personal jurisdiction over Bottle Rock Corporation.
When a Court has personal jurisdiction over a defendant, Federal Rule of Civil Procedure 4(h)(1) provides two methods for effecting service upon corporations located within the United States when there has been no waiver of service. See Pellerin-Mayfield v. Goodwill Industries, 2003 WL 21474649 (E.D. La. 2003). First, a plaintiff may effect service under the laws of the state in which the district court is located or in which service is effected. Fed.R.Civ.P. 4(h)(1). In Louisiana, service of process on a domestic or foreign corporation is made by personal service on any one of its agents for service of process. Second, a plaintiff may effect service upon a corporation by delivering a copy of the summons and complaint to an officer, a managing or general agent, or to any other agent authorized by appointment of law to receive service of process. Fed.R.Civ.P. 4(h)(1). The Affidavit of Service filed in this case on January 2, 2004 indicates that the Plaintiffs served Bottle Rock Power on December 12, 2003 through its agent for service of process, Ronald Suess. The Plaintiffs have submitted the records of the California Secretary of State identifying Ronald Suess as the designated agent for service of process for Bottle Rock Power. (Plaintiff's Exhibit G). However, as the Defendants point out, the Statement of Domestic Corporation identifying Mr. Suess as the agent for service of process was filed on November 17, 2000 — three years before Mr. Suess was served by the Plaintiffs. In his deposition. Mr. Suess testified that he was the President of Bottle Rock Power from November 1999 to May 2003, and then again beginning in June 2004. (Plaintiff's Exhibit F, page 6). Mr. Suess was neither an officer nor a director when the Plaintiffs served him as the agent of Bottle Rock Power. The Defendants argue that the Statement of Domestic Corporation was not up to date and the Plaintiffs had the burden of determining who was the proper person to serve as a representative of Bottle Rock. This Court finds that the Plaintiffs rightfully relied on the records on file with the California Secretary of State and had no reason to believe that Mr. Suess had ceased to be Bottle Rock's agent for service. It was Bottle Rock Power's responsibility to update the state records and the Plaintiffs should not be penalized for Bottle Rock's failure. Therefore, service was properly made upon Bottle Rock Power by serving Mr. Suess.
C. Improper Venue
Pursuant to 28 U.S.C. § 1391(a)(2), venue is proper in a "judicial district in which a substantial part of the events or omissions giving rise to the claim occurred, or a substantial part of property that is the subject of the action is situated . . ." Venue is also proper in "a judicial district in which any defendant is subject to personal jurisdiction at the time the action is commenced, if there is no district in which the action may otherwise be brought" 28 U.S.C. § 1391(a)(3). The place of performance can provide proper venue. Asean Homes, Inc., 1999 WL at *4. In the instant case, the note at issue was to be repaid to a Louisiana bank. The loan was made through that Louisiana bank by a Louisiana resident. Therefore, the events and omissions giving rise to the Plaintiffs' claim against Bottle Rock Power occurred in Louisiana. Bottle Rock argues that a substantial part of the events occurred in California and the real property at the heart of the case (the power plant) is located in California. However, as the Plaintiffs point out, Monroe's claim for repayment under the promissory note is separate from any of the events that occurred in California regarding the plant. The loan was not secured by the power plant, nor was Monroe involved in any of the California transactions. Therefore, the Eastern District of Louisiana is the proper venue for the Plaintiffs' action against Bottle Rock Power.
IV. MOTION OF DEFENDANT, IPIC INT'L INC. BY AND THROUGH ITS RECEIVER, DENNIS L. ROOSSIEN, JR. TO DISMISS FOR LACK OF PERSONAL JURISDICTION, OR IN THE ALTERNATIVE, MOTION TO DISMISS OR TRANSFER VENUE
Pursuant to Fed.R.Civ.P. 12(b)(2), Defendant IPIC International, Inc. ("IPIC"), through its receiver, Dennis Roosien, Jr., moves the Court to dismiss the Plaintiff's claim for lack of personal jurisdiction. In the alternative, pursuant to Fed.R.Civ.P. 12(b)(3). 28 U.S.C. § 1391(a). IPIC moves the Court to either dismiss the Plaintiff's claims based on improper venue or to transfer this action to a more convenient venue. IPIC claims that it did not have the requisite minimum contacts with Louisiana for this Court to exercise personal jurisdiction over IPIC. Additionally, IPIC asserts that under the Order Appointing Permanent Receiver entered in the U.S. District Court for the Northern District of Texas, the proper venue for the action is in the Northern District of Texas. The Plaintiffs respond that jurisdiction and venue are proper because this case concerns an agreement by IPIC to obtain a release of a letter of credit issued by the Whitney National bank in New Orleans, to provide regular updates to Monroe, a resident of Louisiana, regarding the release, and to pay Monroe for extending the letter of credit for IPIC.
Each of the Defendants have moved to transfer this case to the Northern District of California as a more convenient venue. Therefore, rather than focusing on the transfer arguments of each defendant separately, the Court discusses transfer of the entire case to a more convenient venue in Section VI of this Order Reasons.
ANALYSIS
A. Personal Jurisdiction
This Court has personal jurisdiction over IPIC for essentially the same reasons that it has personal jurisdiction over Bottle Rock Power. Through its Vice President, Larry Kuncl, IPIC had several correspondences with Monroe, a Louisiana resident, regarding an extension of the letter of credit. On July 17, 2003, Kuncl forwarded a written statement to Monroe detailing Monroe's agreement to maintain the $5,000,000 letter of credit for thirty more days, at which time IPIC would replace the letter of credit, releasing Monroe from responsibility. (Plaintiffs' Exhibit A-7). The letter of credit provided by Monroe was issued by Whitney National Bank in New Orleans. The letter of credit indicated that drafts under the letter of credit would be honored upon presentation at the Whitney Bank's international banking department in New Orleans. (Plaintiff's Exhibit A-6). On August 19, 2003, IPIC wired to Monroe's account at Whitney National bank in New Orleans $26,250 to pay amounts owed under the extension agreement. Just as in the situation with Monroe's loan to Bottle Rock, IPIC's conduct in negotiating and obtaining an extension of the letter of credit was purposefully directed toward Louisiana. Monroe is suing IPIC for its failure to honor the extension agreement by releasing Monroe from the letter of credit. Therefore, Monroe's cause of action arises out of IPIC's direct contacts with Louisiana. Furthermore, exercising this Court's in personam jurisdiction over the person of IPIC will not offend the traditional notions of substantial justice. IPIC is in receivership in Texas and has not claimed that it would be unduly burdened by being brought into court in Louisiana Therefore, the Plaintiffs have carried their burden of showing that this Court can exercise specific jurisdiction over the person of IPIC.
Admittedly, the evidence of personal jurisdiction over IPIC is less than it is for Bottle Rock Power, because Bottle Rock seems to have had more extensive negotiations with Monroe and the Whitney New Orleans. Additionally, Bottle Rock was taking on a long-term commitment to pay the note issued by Whitney Bank. IPIC's agreement was to release Monroe from his responsibility on the letter of credit, however, IPIC would have still had to have contact with the bank in New Orleans in order to release the letter of credit.
B. Improper Venue
IPIC's claim that the Eastern District is not a proper venue for this matter is largely based on an action filed by the Securities and Exchange Commission ("SEC"). The SEC initiated a securities fraud enforcement action against IPIC on November 17, 2003 in the U.S. District Court for the Northern District of Texas ("the Texas Court"). Judge Jorge Solis of the Texas Court granted the SEC's motion to appoint Dennis Roosien, Jr. as the receiver for the SEC action. Paragraph 5 of the Receivership Order states:
All persons . . . who receive actual notice of this [Receivership Order] by personal service or otherwise are enjoined from in any way interfering with the operation of the Receivership or in any way disturbing the Receivership Assets and Receivership Records from filing or prosecuting any actions or proceedings which involve the Receiver or which affect the Receivership Assets and Receivership Records . . . except with the prior permission of [the Texas Court]. Any actions so authorized to determine disputes relating to Receivership Assets and Receivership Records shall be filed in [the Texas Court]. (IPIC's Exhibit C, Order Appointing Permanent Receiver, ¶ 5).
The term "Receivership Assets" in the Receivership Order includes "[a]ssets, monies, securities, claims in action, and properties, real and personal, tangible and intangible." (IPIC's Exhibit C, ¶ 1) The Plaintiffs do not deny that they have notice of the Receivership Order. Consequently, IPIC argues that, because Monroe is seeking monetary relief from IPIC, Monroe's dispute relates to Receivership Assets and Venue is, therefore, only proper in the Texas Court. However, the Plaintiffs point to Paragraph 9 of the Receivership Order, which states:
This [Receivership] Order does not prohibit the prosecution of any civil action or other proceeding against [IPIC], including non-dischargeability proceedings and enforcement of any judgments obtained in such actions or proceedings, or effect the release of any claim asserted therein. However, to the extent judgment creditors or other claimants seek to prosecute an action or proceeding against [IPIC], or to satisfy a judgment or claim from Receivership Assets, they will do so only with the prior permission of [the Texas Court] or the United States Bankruptcy Court in the event the Receiver recommends and [the Texas Court or the United States Bankruptcy Court] approves commencement of such a proceeding, and in accordance with an order or priority established by a plan of liquidation and distribution, or any automatic or other stay provided under the Bankruptcy Code. (IPIC's Exhibit C, Order Appointing Permanent Receiver, ¶ 9).
The Plaintiffs are correct in arguing that Paragraph 9, rather than Paragraph 5, applies to this case because Monroe's claims are not against the receiver and do not request that this Court determine disputes regarding receivership assets. Instead, Monroe's claims are the sort of civil action described in Paragraph 9. Unlike Paragraph 5, Paragraph 9 does not require such civil actions against IPIC to be brought in the Texas Court. However, Paragraph 9 does require permission from the receivership court prior to prosecuting a claim against IPIC. Though Monroe filed a motion in the Texas court seeking permission to proceed on October 25, 2004, the Texas Court has not yet ruled on that request. Therefore, the Plaintiffs cannot proceed in their claims against IPIC. Rather than dismissing the claims against IPIC at this time, the Court will stay the claims pending either permission or denial of permission to proceed by the Texas Court.
The Plaintiffs argue that in the Agreed Order to stay the case, IPIC agreed not to request another stay and to not require the Plaintiffs to get permission from the Texas Court. However, the Agreed Order makes no mention of voiding the Receivership Order issued by the Texas Court (Plaintiffs' Exhibit E).
IPIC's second argument is that venue is improper in the Eastern District of Louisiana because no any substantial events or omissions giving arise to the Plaintiffs' claims occurred in this District. However, just as in the Plaintiffs' claim against Bottle rock Power, the place of performance is a proper venue. Asean Homes, Inc., 1999 WL 1102427 at *4. The Plaintiffs have sued IPIC for not releasing the letter of credit as agreed. IPIC argues that it was not obligated to perform any actions in Louisiana under the extension agreement. However, releasing the letter of credit could only be performed through contact with the Whitney Bank in New Orleans. Furthermore, the Plaintiffs point to several occasions when calls were made and facsimiles were sent to Monroe in Louisiana on behalf of IPIC regarding extending the letter of credit. These "long distance" communications into Louisiana, giving rise to the Plaintiff's claim, support the conclusion that a requisite amount of substantial events or omissions took place in the Eastern District of Louisiana, making this District a proper venue for this matter. Torchmark Corp. v. Rice, 945 F. Supp. 172, 179 (E.D. Ark. 1996)
V. MOTION OF DEFENDANTS, DAVID J. JONES, JIMMY WINEMILLER, MONTEREY FARMS, INC. AND AB FARMS, INC. TO DISMISS FOR IMPROPER VENUE, OR ALTERNATIVELY TO TRANSFER TO PROPER (VENUE), OR FURTHER ALTERNATIVELY, TO MORE CONVENIENT VENUE
Pursuant to Fed.R.Civ.P. 12(b)(3), 28 U.S.C. § 1391(a), Defendants Jones, Winemiller, Monterey Farms, and AB Farms ("the Arkansas Defendant") move the Court to either dismiss the Plaintiff's claims based on improper venue or to transfer this action to a more convenient venue. The Arkansas Defendants claim that there are not any significant events or omissions giving rise to the Plaintiffs' claims that occurred in the Eastern District of Louisiana, making this district an improper venue for this action. The Plaintiffs argue that venue is proper in this District because this case concerns an agreement by the Arkansas Defendants to make payments under a note at the Whitney Bank in New Orleans and to obtain a release of the letter of credit issued by the Whitney National bank in New Orleans.
Each of the Defendants have moved to transfer this case to the Northern District of California as a more convenient venue. Therefore, rather than focusing on the transfer arguments of each defendant separately, the Court discusses transfer of the entire case to a more convenient venue in Section VI of this Order Reasons.
ANALYSIS
A. Improper Venue
Venue is proper in the Eastern District of Louisiana because significant events and omissions giving rise to the Plaintiffs' claim occurred here. The Plaintiffs are suing Jones and Winemiller for unjust enrichment and for the sums due on the promissory note. The Plaintiffs are suing Monterey Farms and AB Farms for unjust enrichment and for failing to release the letter of credit and to pay the associated costs. Both the promissory note and the letter of credit were issued by the Whitney National Bank in New Orleans. Therefore, Jones, Winemiller, Monterey Farms, and AB Farms ("the Arkansas Defendants") each allegedly owed a performance that had to be accomplished through contact with Louisiana. Therefore, just as was the case with Bottle Rock Power and IPIC, venue is proper in this District.
VI. MORE CONVENIENT VENUE
Even if venue is proper in the Eastern District of Louisiana, each of the Defendants believe that the Northern District of California is both a proper and more convenient venue and, therefore, the case should be transferred to the Northern District of California. 28 U.S.C. § 1404(a) provides that "[f]or the convenience of the parties and witnesses, in the interest of justice, a district court may transfer any civil action to any other district or division where it might have been brought." Courts are given broad discretion in deciding whether to transfer a case for the convenience of the parties. Asean Homes, Inc., 1999 WL at *4. However, although the Court has discretion in transferring this case to another proper venue, "the defendant must make a convincing showing of the right to have the case transferred." Southern Investors II v. Commuter Aircraft Co., 520 F.Supp. 212 (M.D. La. 1981).
The Defendants argue that it would be in the interest of justice to transfer this case to the Northern District of California because California law will apply, most of the witnesses, as well as the real property involved, are near that district. The Defendants believe that the evidence is easily at hand in the Northern District of California, and the Defendants could more adequately defend themselves and not be overwhelmed by the resources of the Plaintiffs if the case were in California. Furthermore, the Defendants argue that the case's only connection to Louisiana is that Monroe's residence is in Louisiana. The Defendants' assertions, however, do not specifically demonstrate that the Northern District of California would be a more convenient forum.
The Defendants do not cite any case law to support their assertion that California law will apply in this suit. At best, it is unclear which state's law applies. The strongest argument is that Louisiana law is the appropriate law because the Plaintiffs' claims involve a promissory note and a letter of credit executed by a bank in Louisiana. However, determining the applicable law is not an issue presently before the court and is not determinative of the proper venue for this matter.
The Court agrees with the Plaintiffs that the location of the California power plant has little to do with determining the proper and more convenient venue for this matter. It was not the purchase of the California plant that gave rise to this action. Rather, the Plaintiff's suit arises out of sums allegedly owed on a promissory note and an alleged failure to release a line of credit. Therefore, the property that was bought using the loan and line of credit is unimportant.
The most important factor in a motion to transfer venue is the convenience of the witnesses. Therefore, the Defendants must make "a specific showing of the necessary witnesses and what their testimony will be to warrant a transfer of venue." Blanchard Co. v. Spectrum Nunusmatics. Inc., 1994 WL 606191 (E.D. La. 1994), citing, Southern Investors II, 520 F.Supp. at 218-219. The Defendants assert that vital witnesses, such as Ronald Suess (former President of Bottle Rock Power who signed the promissory note on its behalf), Louis Capuano (former consultant to Bottle Rock Power who was personally involved in many of the events at issue), and Larry Kunel (Vice President of IPIC who executed the letter of credit extension agreement on its behalf) all reside in California. The Defendants argue that these California witnesses are out of the subpoena power of this Court. However, all of these witnesses are agents of the Defendants, and are, therefore, under the Defendants' control. These sort of witnesses can easily be made to appear at trial by the Defendants themselves, without needing a subpoena from the Court.
Many of the important potential witnesses in this matter are located in various parts of the country, not solely in California. Defendant David Jones is an Arkansas citizen, while Defendant Jimmy Winemiller is a citizen of Tennessee. Monterey Farms and AB Farms are both Arkansas Corporations. Furthermore, IPIC is in receivership in Texas, which is also where Arlie Beane, Bottle Rock Power's agent, resides. Additionally, Monroe and several witnesses involved in the Whitney National bank transactions reside in Louisiana. The Defendants have not made a convincing showing that the Northern District of California would provide a more convenient forum for the majority of the most important witnesses in this case. Rather, the Defendants, at most, merely demonstrate that the Northern District of California is a forum that would be either equally convenient or would shift any possible inconvenience from the Defendants to the Plaintiffs. See Southern Investors II, 520 F.Supp. at 218. Such a showing is not sufficient to warrant transfer from the Eastern District of Louisiana.
VII. CONCLUSION:
1) The Motion of defendants, David J. Jones, Jimmy Winemiller, Monterrey Farms, Inc. and AB Farms, Inc., for Review of and Objections to Magistrate Judge's Order and Reasons Granting in Part and Denying in Part Plaintiffs' Motion to Compel is DENIED. Furthermore, said Defendants should be ordered to IMMEDIATELY PRODUCE all responsive documents.
2) The Motion of defendant, Bottle Rock Power Corp., to Quash Service of Process; and to Dismiss for Lack of Personal Jurisdiction, Insufficiency of Service of Process and Improper Venue or Alternatively to Transfer to Proper or More Convenient Venue is DENIED.
3) The Motion of defendant, IPIC Int'l Inc. by and through its receiver, Dennis L. Roossien, Jr., to Dismiss for Lack of Personal Jurisdiction, or in the alternative, Motion to Dismiss or Transfer Venue should is DENIED. The Plaintiff's claims against IPIC are STAYED pending either permission or denial of permission to proceed by the Texas Court.
4) Motion of defendants, David J. Jones, Jimmy Winemiller, Monterrey Farms, Inc. and AB Farms, Inc. to Dismiss for Improper Venue, or alternatively to Transfer to Proper (Venue), or further alternatively, to More Convenient Venue is DENIED.