Opinion
NOT FOR PUBLICATION
ORDER ON MOTION TO DISMISS OR TRANSFER VENUE
PETER W. BOWIE, Chief Judge, United States Bankruptcy Court.
Nancy Wolf, the Chapter 7 trustee for this case, moved to dismiss or transfer the case to the Central District of California for the reason that venue lies in the Central District, not the Southern District of California.
The governing statute is 28 U.S.C. § 1408, which provides in relevant part:
Except as provided in section 1410 of this title, a case under title 11 may be commenced in the district court for the district -
(1) in which the domicile, residence, principal place of business in the United States, or principal assets in the United States, of the person or entity that is the subject of such case have been located for the one hundred and eighty days immediately preceding such commencement, . . ..
In the instant case, debtors reside in Temecula, in Riverside County, which is in the Central District of California. 28 U.S.C. § 84. There is no contention that they reside or are domiciled in the Southern District. Mr. Malone operates a home inspection service out of their Temecula home, inspecting homes in both Riverside and San Diego Counties - more frequently in the former rather than the latter.
The lone claim for proper venue in San Diego is that Ms. Malone is under contract to teach at Santa Fe Christian School in Encinitas, California, which is in San Diego County. She has taught there the past three years on annual contracts. Debtors claim that her employment contract is a "principal asset" in this Chapter 7 case. The trustee counters that the contract is not an asset of the bankruptcy estate, nor is it administrable by the trustee for the benefit of creditors. Rather, it represents potential post-petition revenue which is not property of a Chapter 7 estate.
Debtors rely on dictum in In re Berryhill, 182 B.R. 29, 31 (Bankr. W.D.TN 1995), suggesting that guaranteed future earnings might constitute a "principal asset". Berryhill actually illustrates the problem of venue because there the debtors resided across the river in Mississippi, but chose to file their Chapter 7 case in Memphis, Tennessee. There, not only were the federal judicial districts different, so also were the states, with likely differences in exemptions and substantive state law impacting property rights. Here, at least the state law is the same, although different districts within states have different procedures, allow different professional fees, and may view substantive legal issues differently.
In the instant case, the trustee has not shown any particular injury to creditors by allowing venue to remain in this district. Nor is the trustee required to do so. The fact is debtors do not reside in this district. Their over-encumbered house is in the Central District. If the trustee wanted to examine it, the trustee would have to travel out of district, albeit only a mile or so. The debtors argue that having the case in San Diego is more convenient for them, although in a routine Chapter 7 there is little outside the first meeting of creditors that would call for their presence here. It is no answer to say their attorney is in this district, because they made that choice at the outset and cannot bootstrap the choice into a justification for venue.
While the Court sees no great harm to the bankruptcy system by allowing this case to remain in this district, the Court is unable to see the future. Congress chose the terms of its venue provision. Debtors have failed to show how they meet the requirements of § 1408. In this Chapter 7 case, Ms. Malone's contract to teach the current school year in San Diego County while commuting daily from the Central District of California does not satisfy the "principal asset" element of § 1408.
Accordingly, the trustee's motion should be, and hereby is granted. Under the circumstances of this case, the Court elects to transfer the instant case to the Central District of California.
IT IS SO ORDERED.