Opinion
No. 88-264.
May 25, 1988.
Gerald D. Rosen, Rosen, McGlynn, Crosson Resnek, Newton Centre, Massachusetts, attorney for the debtor.
Anthony C. Marts, Wiggen Nourie, Manchester, New Hampshire, attorney for FHLMC.
Clayton A. Davis, Federal Home Loan Mortgage Corporation, Dallas, Texas.
Venue — Debtor — Insufficient Contacts. — The New Hampshire venue of a bankruptcy case was deemed improper and ordered transferred to the situs of the property in Texas because the debtor was not organized as a corporation in New Hampshire and none of its officers, directors or shareholders were residents of New Hampshire. Also, the debtor's property was located in Texas and the debtor was not registered to do any business in New Hampshire.
See Rule 1014(a) at ¶ 21,014.
THIS MATTER having come before this Court for hearing on the Motion of the Federal Home Loan Mortgage Corporation ("Freddie Mac") for transfer of this case to the Western District of Texas on May 23, 1988, the Court having heard arguments of counsel for the debtor and the movant, and based upon the evidence presented, and the pleadings and record in this case, the Court finds as follows:
1. Debtor was organized as a Massachusetts Corporation with an address of 51 Pickwick Road, Newton, Massachusetts, on Thursday, April 28, 1988.
2. Freddie Mac is the owner and holder of a certain multi-family deed of trust dated August 15, 1986 between Freddie Mac as lender and Hutkin Properties III ("Hutkin") a Missouri Limited Partnership, as mortgagor to secure a certain promissory note given by Hutkin in the amount of $4,093,000.00; said mortgage on an apartment complex known as The Brook Apartments located in the City of Austin, Travis County, Texas (the "Property").
3. Hutkin delivered a Quit Claim Deed to the Property to Debtor on Thursday, April 28, 1988.
4. The Debtor paid no cash consideration for the Property but took it subject to the approximately $4,600,000.00 secured claim of Freddie Mac and the Debtor delivered to Hutkin the Debtor's promissory note secured by the Property for an additional $2,500,000.00.
5. The Property was scheduled for foreclosure by Freddie Mac in accordance with Texas state law for Tuesday, May 3, 1988 at 9:00 a.m. (Texas time).
6. Debtor's deed from Hutkin was recorded in Austin, Texas, on Monday, May 2, 1988 at 9:00 a.m. (Eastern Standard Time).
7. Debtor filed its bankruptcy petition in New Hampshire on the same day, Monday, May 2, 1988 at 11:12 a.m. (Eastern Standard Time).
8. None of the Debtor's officers, directors and shareholders are residents of New Hampshire (other than to the extent one of the Debtor's shareholders owns a second home in New Hampshire), and each of them maintain their principal places of business outside of New Hampshire.
9. The Debtor had not been registered to do business in New Hampshire at the time of its Bankruptcy filing.
10. The Debtor has office space available to it at an apartment building in Manchester, New Hampshire, owned by another entity which is owned or controlled by one of the Debtor's shareholders.
11. The Debtor still has no telephone listing in New Hampshire.
12. The Debtor has no bank accounts or any other assets in New Hampshire (or elsewhere) other than bare title to the Property in Texas.
13. Any present and future tenant of the Property will necessarily reside in Texas.
14. Freddie Mac is the largest creditor of the Debtor and has been in possession and control of the property as mortgagee in possession since approximately April 1987.
BASED UPON the foregoing findings of fact and those further findings dictated into the record at said hearing, THIS COURT FINDS AND RULES that the Debtor does not have sufficient contacts with the District of New Hampshire to establish domicile, residence, principal place of business or principal assets in this district as required for venue under 28 U.S.C. § 1408 and thus venue in New Hampshire is improper. FURTHER, even if venue were permissible under 28 U.S.C. § 1408, under the discretionary change of venue standards of either 28 U.S.C. § 1412 or Bankruptcy Rule 1014(a), this Court has the authority to transfer this case to an alternative district and, based upon the foregoing facts, the reasons stated in the record, the Memorandum of Law submitted by Freddie Mac and cases cited therein, and the other pleadings filed in this case, THIS COURT FURTHER FINDS AND RULES that, even if New Hampshire were a proper venue for this case under 28 U.S.C. § 1408, venue should be transferred to the situs of the Property in the interest of justice and for the convenience of the parties under 28 U.S.C. § 1412 and under Bankruptcy Rule 1014(a).
THEREFORE, IT IS HEREBY ORDERED that this case be transferred to the United States Bankruptcy Court for the Western District of Texas, Austin Division. In accordance with this Order all pending motions and proceedings shall be transferred with this case subject to this Court's limited stay dated May 11, 1988, said motions and proceedings to be scheduled and heard at the discretion of the United States Bankruptcy Court for the Western District of Texas, Austin Division.