Opinion
Civil Action No. 3:03-CV-3098-B.
April 1, 2005
MEMORANDUM ORDER
Before the Court is Defendant GMAC Commercial Mortgage Corporation's Motion to Dismiss or Alternatively to Transfer Venue (doc. 5), filed February 10, 2004. Because GMACCM has not met its burden of demonstrating that Texas is an improper venue or that New York is a more convenient forum, the Court DENIES GMACCM's Motion.
I. BACKGROUND
The facts of this case revolve around a Forward Rate Lock Agreement entered into by Plaintiff Grencorp Financial Limited Partnership ("Grencorp"), Plaintiff USPG Portfolio One, L.L.C. ("USPG"), and Defendant GMAC Commercial Mortgage Corporation ("GMACCM"). Grencorp is organized under the laws of the Province of Alberta, Canada. (Pls.' Orig. Pet. ¶ II) USPG is a Delaware limited liability corporation with a principal place of business in Ohio. ( Id.) GMACCM is a California corporation with a principal place of business in Pennsylvania. (Haber Aff. ¶ 4)
According to Plaintiffs' Petition, the parties entered into the Forward Rate Lock Agreement (the "Agreement") to secure particular interest rates for a loan Plaintiffs wished to take from GMACCM. (Pls.' Orig. Pet. ¶ IV.2) Pursuant to the Agreement, Plaintiffs deposited funds with GMACCM in excess of $5.5 million. ( Id. at ¶ IV.3) Relations between the parties subsequently broke down and this suit followed. In their Petition, Plaintiffs seek over $5 million in damages from GMACCM for breach of the Agreement, breach of fiduciary duty, and conversion.
Plaintiffs filed suit in Texas state court on December 4, 2003, which GMACCM removed to this Court on the basis of diversity jurisdiction on December 31, 2003. GMACCM then filed the instant Motion to Dismiss or Alternatively to Transfer Venue on February 10, 2004. In its Motion, GMACCM seeks dismissal of the suit for improper venue or, alternatively, for transfer of venue to the Southern District of New York. The parties have briefed the issues, and the Court now turns to the merits of the decision.
This case was transferred from the docket of the Honorable Sam A. Lindsay to the docket of the Honorable Jane J. Boyle on July 19, 2004, pursuant to Special Order No. 03-239.
II. ANALYSIS
A. Motion to Dismiss for Improper Venue
GMACCM initially moves to dismiss the suit pursuant to 28 U.S.C. § 1406(a) (1993 Supp. 2004), claiming that venue is improper. Pursuant to 28 U.S.C. § 1391(a),
A civil action wherein jurisdiction is founded only on diversity of citizenship may, except as otherwise provided by law, be brought only in (1) a judicial district where any defendant resides, if all defendants reside in the same State, (2) a judicial district in which a substantial part of the events or omissions giving rise to the claim occurred . . . or (3) 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.
GMACCM relies on § 1391(a)(2) and argues that venue is improper because a substantial portion of the events giving rise to this litigation did not occur in Texas, but rather in New York. Plaintiffs counter by pointing to the fact that GMACCM has an office in Dallas, Texas, although that office admittedly had nothing to do with the facts of this case. (Haber Aff. ¶ 5) Part (c) of § 1391 provides that a corporate defendant is deemed to reside in any judicial district in which it is subject to personal jurisdiction. Therefore, according to Plaintiffs, because GMACCM has an office in Dallas, it is subject to personal jurisdiction in Texas, and venue is proper under § 1391(a)(1). In its Reply, GMACCM appears to concede that Plaintiffs' argument is correct. (Def.'s Reply Br. p. 9) The Court also agrees with Plaintiffs. Therefore, because GMACCM is a resident of Texas, venue is proper, and the Court DENIES GMACCM's Motion to Dismiss based on improper venue.
B. Motion to Transfer Venue
GMACCM alternatively moves to transfer venue, pursuant to 28 U.S.C. § 1404(a), which permits the Court to transfer any civil action to any other district where it might have been brought "[f]or the convenience of the parties and witnesses, in the interest of justice. . . ." The purpose of this rule is to "protect litigants, witnesses, and the public against unnecessary inconvenience and expense." Van Dusen v. Barrack, 376 U.S. 612, 616 (1964). The burden of demonstrating why transfer is appropriate rests with GMACCM in this case. Von Graffenreid v. Craig, 246 F. Supp. 2d 553, 563 (N.D. Tex. 2003) (stating that movant must demonstrate that balance of convenience and justice weighs heavily in favor of transfer). A court's decision of whether or not to transfer a case under § 1404(a) is discretionary. Jarvis Christian College v. Exxon Corp., 845 F.2d 523, 528 (5th Cir. 1988).
Plaintiffs concede that venue would have been appropriate in the Southern District of New York. (Pls.' Resp. Br. p. 8 ["New York is one of many proper places of venue"]); see also Wolf Designs, Inc. v. Donald McEvoy Ltd., 355 F. Supp. 2d 848, 851 (N.D. Tex. 2005) (holding threshold inquiry in motion to transfer venue is whether proposed transferee district is one in which suit might have been brought).
The Court must consider a number of factors in determining whether a venue transfer is appropriate. While the Plaintiffs' choice of forum is given substantial deference, it is not conclusive or determinative; however, the Court may not simply shift the inconvenience from GMACCM to Plaintiffs. In re Horseshoe Entm't, 337 F.3d 429, 434 (5th Cir. 2003); Int'l Truck Engine Corp. v. Quintana, 259 F. Supp. 2d 553, 558 (N.D. Tex. 2003); TIG Ins. Co. v. NAFCO Ins. Co., 177 F. Supp. 2d 561, 568 (N.D. Tex. 2001). The Court is also to consider various private and public interests in making its decision. In re Volkswagen AG, 371 F.3d 201, 203 (5th Cir. 2004) (per curiam). The private concerns identified by the courts are: (1) the relative ease of access to sources of proof; (2) the availability of compulsory process to secure the attendance of witnesses; (3) the cost of attendance for willing witnesses; and (4) all other practical problems that make trial of a case easy, expeditious and inexpensive. Id. The public concerns include: (1) the administrative difficulties flowing from court congestion; (2) the local interest in having localized interests decided at home; (3) the familiarity of the forum with the law that will govern the case; and (4) the avoidance of unnecessary problems of conflict of laws or the application of foreign law. Id. The Court will now consider the factors in the context of the facts of this case.
1. Relative Ease of Access to Sources of Proof
GMACCM states that all of the relevant documents in this case are in New York. (Haber Aff. ¶ 34) Plaintiffs counter that their relevant documents are in Texas, although their evidence falls short of proving that. (Pls.' App. p. 108) Therefore, this factor weighs in favor of transferring the case to New York. However, because GMACCM has not put on evidence of the amount of documents or the inconvenience that would be incurred in transporting them to Texas, the Court cannot give it much weight.
2. Availability of Compulsory Process
The parties did not specifically address whether compulsory process was available; however, the Court notes that the only non-employee witnesses identified by either side are Grencorp's Texas attorney and GMACCM's New York attorneys. (Haber Aff. ¶ 32) Thus, while Texas would be inconvenient for GMACCM's attorneys, New York would be equally inconvenient for Grencorp's attorney. Thus, this factor does not weigh in favor of transfer.
3. Cost of Attendance for Willing Witnesses
The parties have identified witnesses in Canada, New York, Texas, Pennsylvania, and Michigan, with the majority of GMACCM's witnesses residing in New York and the majority of Plaintiffs' witnesses residing in Canada. To the extent the witnesses are employees of the parties in this case, however, their convenience is given less consideration, because their testimony can be compelled. TIG Ins. Co., 177 F. Supp. 2d at 568-69. Neither party has provided much detail about the substance or importance of each witness's testimony. See SMI-Owen Steel Co. v. St. Paul Fire Marine Ins. Co., 113 F. Supp. 2d 1101, 1104 (S.D. Tex. 2000) (stating "[a]t an absolute minimum," movants must identify key witnesses and provide a brief summary of their testimony). Thus, while it is more convenient for GMACCM to litigate this case in New York, the Court, again, cannot give this factor much weight given the lack of information regarding the witnesses' testimony and the uncertainty if Plaintiffs' witnesses will be inconvenienced by a New York venue.
Although neither party has presented evidence on it, the Court takes judicial notice that Calgary (where Grencorp is located) is approximately 350 miles closer to Dallas than it is to New York City.
4. Any Other Practical Problems
Plaintiffs claim that the Court should consider the fact that their attorneys in this case are located in Texas. GMACCM is correct, however, in noting that Fifth Circuit precedent does not permit location of counsel to factor into whether transfer is appropriate. In re Volkswagen, 371 F.3d at 206 (finding that trial court's consideration of location of counsel was reversible error in transfer decision); In re Horseshoe, 337 F.3d at 434 (finding no support for consideration of location of counsel in transfer decision). Therefore, this factor does not sway the Court in either direction.
5. Administrative Difficulties and Court Congestion
GMACCM did not address the issue of court congestion; however Plaintiffs included evidence that cases in the Northern District of Texas move almost twice as fast as cases in the Southern District of New York. (Pls.' App. pp. 109-10) Therefore, this factor weighs in favor of keeping the case in Texas.
6. Local Interest
None of the parties to this litigation are citizens of Texas or New York, so as far as protecting the rights of its citizens, neither location can claim more of an interest than the other. GMACCM's office that was involved in the Agreement is located in New York, and it appears that New York law will be applied, pursuant to the Agreement. (Def.'s App. Ex. B p. 5) Therefore, New York may have a slightly greater interest in this litigation than Texas. 7. Familiarity of Forum with Governing Law
Although not a factor, the parties have put on evidence that the acts leading up to this lawsuit occurred in New York, Texas, Canada, Pennsylvania, and Michigan.
Assuming New York law governs this case, the Southern District of New York will be more familiar with that law. However, GMACCM has not identified any novel issues of New York state law, and this Court is capable of applying New York law to this case. Therefore, this factor only slightly favors New York.
8. Avoidance of Unnecessary Conflicts of Law
Neither party addressed this last issue; however, the Court does not foresee any conflict of law issues that would be eliminated by transferring this case to New York, as opposed to keeping it in Texas. Therefore, this factor does not militate in either direction.
9. Forum Selection Clause
GMACCM also relies heavily on a venue provision contained in the Agreement which states, "Borrower and Guarantor hereby submit to the non-exclusive jurisdiction of New York with respect to any actions or proceeding arising out of this Agreement. . . ." (Def.'s App. Ex. B, p. 5) Because jurisdiction is "non-exclusive," this forum selection clause, however, is not mandatory, but permissive. A permissive forum selection clause authorizes jurisdiction in the chosen forum, but does not prohibit litigation elsewhere. Excell, Inc. v. Sterling Boiler Mech., Inc., 106 F.3d 318, 321 (10th Cir. 1997); Von Graffenreid, 246 F. Supp. 2d at 560. Therefore, although venue would have been appropriate in New York, the forum selection clause does not require this Court to transfer the case to New York. Caldas Sons, Inc. v. Willingham, 17 F.3d 123, 128 (5th Cir. 1994) (retaining jurisdiction over case with permissive forum selection clause specifying Zurich courts); Keaty v. Freeport Indonesia, Inc., 503 F.2d 955, 957 (5th Cir. 1974) (per curiam) (retaining jurisdiction over case with permissive forum selection clause specifying New York courts).
In assessing all of the facts, the Court finds that, while some factors favor a New York venue, they are not strong enough to overcome Plaintiffs' choice of venue in Texas. It is undoubtedly more convenient for GMACCM to litigate in Texas, but there has been an insufficient showing that a transfer would not simply shift the burden of inconvenience to Plaintiffs. See TIG Ins. Co., 177 F. Supp. 2d at 568 (stating a court should not transfer a case where the only practical effect is to shift the inconvenience of one party to the other). As such, the Court DENIES Defendant's Motion to Transfer Venue.
III. CONCLUSION
Thus, because GMACCM has not met its burden to show that Texas is an improper venue or that New York is a more convenient venue, the Court DENIES GMACCM's Motion to Dismiss, or Alternatively, to Transfer Venue. The Court will set a Scheduling Conference by separate order to determine how best to proceed with this litigation.