Opinion
Civil No. 03-5539 (JRT/FLN)
February 4, 2004
Kevin K. Stroup, STONEBERG, GILES STROUP, P.A., Marshall, MN, for plaintiff
Jonathan S. Parritz, Andre J. LaMere, MASLON, EDELMAN, BORMAN BRAND, LLP, Minneapolis, for defendant
MEMORANDUM OPINION AND ORDER GRANTING DEFENDANT'S MOTION TO TRANSFER VENUE
Plaintiff Lyon Financial Services, Inc. ("Lyon") was assigned a contract to which defendant Reno Parks Association of Realtors ("RSAR") was a party and is now suing defendant for non-payment on that contract. Defendant moves the Court to transfer the action to the United States District Court for the District of Nevada.
I. BACKGROUND
Lyon is a Minnesota corporation with its principal place of business in Marshall, Minnesota. RSAR is a Nevada entity. On August 31, 2000 RSAR and another Nevada corporation, Skipco, Inc. ("Skipco") entered into a lease under which Skipco. agreed to provide RSAR the use of a copier and related equipment in exchange for monthly payments. On September 1, 2000 Skipco assigned the lease to Lyon, although Skipco. continued to provide maintenance and service on the copier. The terms of this lease and RSAR's alleged non-compliance with the lease form the basis for this action.
Specifically, RSAR alleges that the terms of the lease included a 90-day trial period, during which RSAR could return the copier without any further obligation. After taking possession of the copier, but before 90 days had expired, RSAR decided that it was not satisfied with the copier's performance and, according to RSAR, attempted to return it to Skipco. Skipco. refused to take back the copier; RSAR ceased making payments under the lease.
Lyon brought suit in Minnesota state court against RSAR for breach of the lease agreement. RSAR removed the case to federal court and now moves to transfer the suit to the United States District Court for the District of Nevada. The lease contained a forum selection clause that provided for resolution of any dispute between RSAR and Skipco. in essentially any court "at the sole election of the Owner or holder of Owner's interest." Lyon contends that this clause explicitly authorizes Lyon's suit in Minnesota and effectively waives any objection by RSAR. RSAR asserts that when it signed the lease, it did not understand the forum selection clause to authorize suit absolutely anywhere in the United States. More pertinently, RSAR argues that transfer of the action is appropriate because Lyon was only minimally involved in the negotiation, execution, and performance of the lease at issue, and virtually all of the equipment, people, and documents involved in the dispute are located in Nevada.
The clause, in its entirety, reads:
CONSENT TO LAW, JURISDICTION, AND VENUE: This Agreement shall be deemed fully executed and performed in the state of Owner or holder of Owner's interest principal place of business and shall be governed by and construed in accordance with its laws. If the Owner or holder of Owner's interest shall bring any judicial proceeding in relation to any matter arising under the Agreement, the Customer irrevocably agrees that any such matter may be adjudged or determined in any court or courts in the state of the Owner or holder of Owner's interest principal place of business, or in any court or courts in Customer's state of residence, or in any other court having jurisdiction over the Customer or assets of the Customer, all at the sole election of the Owner or holder Owner's interest. The Customer hereby irrevocably submits generally and unconditionally to the jurisdiction of any such court so elected in relation to such matters. You waive trial by jury in any action between us.
II. ANALYSIS
In 2001 Lyon brought a very similar suit in Minnesota state court, which was then removed to federal court. Lyon Financial Services, Inc. v. Powernet, Inc., 2001 WL 1640099 (D. Minn. 2001). In Powernet, as in this case, Skipco. agreed to lease copiers and provide maintenance service to the defendant and then assigned the lease to Lyon. Id. The lease in Powernet and the instant lease contain identical choice of venue clauses. Id. The Court finds that in this case, as in Powernet, the forum selection clause effectively and properly confers jurisdiction over defendants in Minnesota. 2001 WL 1640099, at *1.
While the Court will in many cases enforce a valid forum selection clause, see Dominium Austin Partners v. Emerson, 248 F.3d 720, 726 (8th Cir. 2001), the presence of a forum selection clause in a contract is not dispositive. Stewart Org. Inc. v. Ricoh Corp., 487 U.S. 22, 31 (1988). Rather, in determining whether to transfer venue, the Court must ultimately consider and balance all of the competing interests and facts of each individual case. Steward v. Up North Plastics, Inc., 177 F. Supp.2d 953, 960 (D. Minn. 2001). Specifically, the Court considers: (1) the convenience of the parties; (2) the convenience of the witnesses; and (3) the interests of justice. Terra Int'l, Inc. v. Mississippi Chem. Corp., 119 F.3d 688, 691 (8th Cir. 1997); Commodities Specialists Co. v. Brummet, 2002 WL 31898166 (D. Minn. 2002). With respect to the interests of justice, factors including the familiarity of the two courts with the law to be applied, the ability of the parties to bear the expense of litigating in a distant forum, judicial economy, the Plaintiff's choice of forum, obstacles to a fair trial, and each party's ability to enforce a judgment may also be relevant. See Graff v. Qwest Communications Corp., 33 F. Supp.2d 1117, 1121 (D. Minn. 1999). "The party seeking transfer bears the burden of proof to show that the balance of factors `strongly' favors the movant." Powernet, 2001 WL 1640099, at *3 (citation omitted).
In Powernet, this Court determined that although the choice of venue clause authorized Lyon to bring suit against the defendant in Minnesota, transfer to the district of Nevada was nonetheless appropriate under § 1404(a). Id. at *1. Transfer was warranted because the disputed contract was negotiated, executed, and performed exclusively in Nevada, virtually all relevant witnesses and documents were located in Nevada, and Lyon was better able to absorb the cost of litigating in a foreign venue than the defendants, Powemet and Powemet's President. RSAR relies heavily on Powernet in urging transfer of this action.
Lyon contends that this case is more appropriately compared to another action that Lyon was involved in. In Lyon Financial Services, Inc. v. Century 21 Hacienda Realty, Civ. No. 02-3817 (D. Minn.), Skipco. had again assigned Lyon a lease. Lyon brought suit against a California corporation for breach of a copier lease that contained the same forum selection clause found in the instant case and in Powernet. In Century 21, the court denied the defendant's motion to transfer venue to California, finding that to do so would merely switch the burden of litigation between the parties, and that the defendant was as able as Lyon to bear the costs of litigating away from home. Century 21, Civ. No. 02-3817 (D. Minn. Aug. 29, 2003) (order denying motion to transfer). Lyon asserts that in the present case, as in Century 21 and different than in Powernet, the dispute is between two corporate entities each equally able to absorb the costs of an out-of-state litigation. The Court is not persuaded by Lyon's efforts to distinguish Powernet from the present case, and finds that, as in Powernet, transfer is appropriate in this case.
Other than Lyon, the assignee of the disputed agreement, no party to this litigation has any ties to Minnesota. To the contrary, RSAR is a Nevada entity doing business exclusively in Nevada. More importantly, RSAR is a small entity with 10 employees, at least four of whom would be required to travel to Minnesota for trial. Additionally, RSAR is projected to have $80,000 in net income on $1.8 million in gross revenues. Given this financial situation, the burden of financing a trial involving up to 10 out-of-witnesses in Minnesota would be quite a heavy one indeed. In contrast, Lyon has not named anyone who would be required to travel from Minnesota to Nevada for trial, and given Lyon's minimal involvement in the disputed contract, the Court cannot imagine that many of Lyon's employees would be relevant to the dispute.
The disputed contract was negotiated, executed, and performed by RSAR and Skipco. in Nevada, and all or virtually all of the relevant documents and witnesses appear to be located in Nevada. As in Powernet, this case centers on the terms of a contract negotiated between RSAR and Skipco. Lyon did not become involved until after those negotiations had taken place — in Nevada. Further, RSAR asserts that it will be bringing related third-party claims against Skipco. Given that Skipco. has no apparent tie to or presence in Minnesota and to date has not consented to jurisdiction in Minnesota, it is unclear whether personal jurisdiction exists in Minnesota over Skipco. and thus whether RSAR will be able to pursue any claims it may have against Skipco in Minnesota. As jurisdiction over Skipco. clearly exists in Nevada, transfer to Nevada guarantees that all related issues can be resolved by the same court. Thus, convenience of the parties, convenience of potential witnesses, the interests of justice, and consideration of judicial economy all weigh in favor of transfer to Nevada.
According to RSAR, at least ten possible fact witnesses reside in Nevada, and six of the ten are not employed by either RSAR or Lyon. The Court also notes that the present case differs from Century 21 in this respect in that Century 21 and its documents and witnesses were located in California, while Skipco's documents and witnesses were in Nevada. Thus, transfer to California would not have ensured that relevant evidence was all in the same place.
In this case, although the forum selection clause in the agreement between RSAR and Skipco. permits Lyon to bring suit in Minnesota, the Court finds that the interests in upholding the forum selection clause and in honoring the Plaintiff's choice of forum are outweighed by the previously discussed considerations. The Court therefore orders transfer of this action to the District of Nevada.
ORDER
Based on the foregoing, all the records, files, and proceedings herein, IT IS HEREBY ORDERED that defendant's Motion to Transfer Venue under 28 U.S.C. § 1404(a) [Docket No. 6] is GRANTED. The Clerk of Court is DIRECTED TO TRANSFER this case to the United States District Court for the District of Nevada.