Opinion
Civil Action No. 5:98-CV-40-R
January 14, 1999.
MEMORANDUM OPINION ORDER
Plaintiff Sarah Mason filed this action pursuant to the Truth-in-Lending Act, 15 U.S.C. § 1601, et seq., and Federal Reserve Board Regulation Z, 12 C.F.R. § 226.1, et seq. Defendant has filed a motion to dismiss (doc. #5) based on lack of subject matter jurisdiction, improper venue, and the doctrine of abstention.
Defendant asserted in its motion to dismiss that the statute of limitations had run on Plaintiff's claim. However, in its reply, Defendant admitted that the action was tolled pursuant to the Soldiers' and Sailors' Civil Relief Act of 1940 and withdrew the assertion from its motion.
BACKGROUND
On July 10, 1994, Plaintiff entered into a consumer-credit transaction with the Defendant at Fort Campbell, Kentucky. Plaintiff signed a form contract containing a forum selection clause on the reverse side of the document. The clause stated "the place of exclusive jurisdiction, venue, discovery, and controlling law for resolution of disputes" relating to the contract is Gwinnett County, Georgia.
Plaintiff filed this suit on February 4, 1998. Plaintiff asserts that "Defendant purported to extend credit pursuant to an open end credit plan, i.e., a revolving credit agreement when, in fact, Defendant was required to make the more comprehensive credit disclosures applicable to `closed-end' credit transactions." (Plaintiff's response memorandum, p. 1). On March 10, 1998, Plaintiff was served with process in a collection action filed by Defendant. Defendant had filed the collection action on December 23, 1997 in Gwinnett County, Georgia, seeking to recover $1,174.66.
Defendant has moved for dismissal of this Truth-in-Lending action on two remaining grounds: 1) the forum selection clause in the contract requires that Plaintiff's claim be heard in Gwinnett County, Georgia, and 2) this court should abstain based on the prior filed collection action in Georgia.
DISCUSSION
Although the forum selection clause requires contract disputes to be litigated in Georgia, it does not apply to Plaintiff's independent Truth-in-Lending claim. In Maddox v. Kentucky Finance Company, Inc., 736 F.2d 380 (6th Cir. 1994), the Court of Appeals of the Sixth Circuit held that a Truth-in-Lending claim and a debt claim arising out of the same transaction "present entirely different legal, factual, and evidentiary questions." Id. at 383. In its decision on whether a federal court had jurisdiction over the common law debt counterclaim to a Truth-in-Lending action, the Sixth Circuit agreed with prior rulings of two other circuits. See Whigham v. Beneficial Finance Co. of Fayetteville, 599 F.2d 1322 (4th Cir. 1979); Valencia v. Anderson Brothers Ford, 617 F.2d 1278 (7th Cir. 1980), rev'd on other grounds, 452 U.S. 205, 101 S.Ct. 2266, 68 L.Ed.2d 783 (1981).
Mason's action presents a federal question under the Truth-in-Lending Act. Defendant seeks to enforce a contract provision, governed by state law. "The [Truth-in-Lending Act] claim does not involve the obligations created by the underlying contract. Rather, the [Truth-in-Lending Act] claim enforces a federal policy regarding disclosure by invoking a penalty." Maddox, 736 F.2d at 382 (citing Whigham, 599 F.2d at 1324). Regardless of whether the forum selection clause in this contract is reasonable, this Truth-in-Lending claim is outside the scope of the forum selection clause.
A Plaintiff can bring any action under the Truth-in-Lending Act in "any United States district court, or in any other court of competent jurisdiction." 15 U.S.C. § 1640(e). Under 28 U.S.C. § 1391, venue in a non-diversity case is proper in a "judicial district where any defendant resides" or a "judicial district in which a substantial part of the events or omissions giving rise to the claim occurred." A corporate defendant resides "in any judicial district in which it is subject to personal jurisdiction at the time the action is commenced." 28 U.S.C. § 1391(c). Since Defendant solicited the transaction and the parties signed the contract in the Western District of Kentucky, venue is proper in this district.
The doctrine of abstention, Defendant's other ground for seeking a dismissal, does not apply to this case. Since the Truth-in-Lending claim presents completely different legal, factual, and evidentiary issues than the debt collection action in Georgia, see Maddox at 383, the principles of comity and federalism as described in Younger v. Harris, 401 U.S. 37, 91 S.Ct. 746, 27 L.Ed.2d 669 (1971), are not implicated.
THEREFORE, IT IS ORDERED:
Defendant's motion to dismiss (doc. #5) is DENIED.