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Sample Motion To Transfer Federal Venue From California To Nevada (In Las Vegas)

Posted by: on Wed, Nov 14, 2012

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II. LEGAL ARGUMENT in SUPPORT OF MOTION TO TRANSFER VENUE TO DISTRICT OF NEVADA

For the convenience of the parties and in the interest of justice, the Court should transfer this case to the U.S. District Courts located in the District of Nevada (Las Vegas), pursuant to 28 U.S.C. § 1404. That statutes provides that “for the convenience of parties and witnesses, in the interest of justice, a district court may transfer any civil action to any other district or division where it might have been brought.”

By enacting § 1404(a), Congress intended to authorize the easy transfer of actions to a more convenient forum, often as a simple housekeeping measure. See, Dusen v. Barrack, 376 U.S. 612, 636-37 (1964) (statute was designed as a “federal judicial housekeeping measure,” to allow for easy change of venue). The underlying premise of § 1404(a) is that “courts should prevent plaintiffs from abusing their privilege under § 1391 by subjecting defendants to venues that are inconvenient under the terms of § 1404(a).” In re Volkswagen of AM., Inc., 545 F.3d 304, 313 (5th Cir. 2008) (citing Norwood v. Kirkpatrick, 349 U.S. 29, 31-32 (1955)). To cure such problems, district courts have broad discretion on deciding whether to transfer an action to another better suited district under § 1404(a). Id. at 311.

A party moving to transfer a case pursuant to § 1404 bears the burden of establishing the inconvenience of the existing forum where the action was initially filed. Id. at 314. The party moving for a transfer of venue must establish that: (1) venue is proper in the transferee court, and (2) the transfer would promote the convenience of the parties and the witnesses, and serve the interests of justice. See, 28 USC § 1404(a); Volkswagen, 545 F.3d at 312, 315.

As will be examined more fully below, the relevant factors all weigh heavily in favor of transferring this case from the __________District of California to the District of Nevada (in Las Vegas).

A. Plaintiff Could have Initially Filed this Case in the District of Nevada.

The first threshold question in a § 1404 analysis is whether the case “might have been brought in the proposed transferee district.” See 28 USC § 1404(a); Volkswagen, 545 F.3d at 312. As noted above, the general venue statute provides that a civil action may be brought in:

(1) A judicial district in which any defendant resides if all defendants are residents of the state in which the district is located; (2) a judicial district in which a substantial part of the events or omissions giving rise to the claim occurred, or a substantial part of the property that is the subject of the action as situated; or (3) if there is not a district in which an action may otherwise be brought as provided in this section, any judicial district in which any defendant is subject to the court’s personal jurisdiction with respect to such action.

28 USC § 1391(b).

For venue purposes, the limited liability company defendants such as Mazal, El-Darr, or Herstyler are“deemed to reside in any judicial district in which such defendant is subject to the court’s personal jurisdiction with respect to the civil action in question” or in a multi-district state such as California, “any district in that state within which its contacts would be sufficient to subject it to personal jurisdiction if that district were a separate state….” 28 USC § 1391(c)(2), (d).

Once it has been established that a case could have been brought in the transferee district, transfer is appropriate if it will promote the “convenience of the parties and witnesses” and serve “the interest of justice.” See 28 USC § 1404(a), In re Volkswagen AG, 371 F.3d 201, 203 (5th Cir. 2004); Jones v. GNC Franchising Inc., 211 F.3d 494 (9th Cir. 2000). A Defendant for whom venue is proper but inconvenient may move for a change of venue under 28 USC § 1404(a). Action Embrodiery Corp. v. ATL Embrodiery Inc., 368 F.3d 1174, 1181 (9th Cir. 2004). To determine whether transfer is appropriate, the district court in the Ninth Circuit should consider several factors, including:

(1) The location where the relevant agreements were negotiated and executed; (2) the state that is most familiar with the governing law; (3) the plaintiff’s choice of forum; (4) the respective parties’ contacts with the forum; (5) the contacts relating to the plaintiff’s cause of action in the chosen forum; (6) the differences and the costs of litigation in the two forums; (7) the availability of compulsory process to compel attendance of unwilling nonparty witnesses; and (8) the ease of access to sources of proof. Additionally, the presence of a forum selection clause is a “significant factor” in the Court’s § 1404(a) analysis. We also conclude that the relevant public policy of the forum state, if any, is at least a significant a factor in the § 1404(a) balancing.

Jones v. GNC Franchising Inc., 211 F.3d 494, 498-99 (9th Cir. 2000).

Application of the foregoing eight (8) Jones v. GNC factors yields the following conclusions as to why a transfer of venue is proper:

1. Location where the relevant agreements were negotiated and executed. All the agreements and relevant loan documents indicate that they were each delivered in the State of Nevada.

2. The state that is most familiar with the governing law. Here, all but two of the documents, contain a Nevada choice of law provision. Because of the economic crisis in Nevada, Las Vegas has the dubious honor of being one of the top foreclosure real estate markets in the United States. As a result, both the Nevada State and Federal courts have seen a substantial increase in foreclosure litigation and deficiency litigation involving both borrowers and guarantors. This has resulted in numerous amendments to the Nevada Revised Statutes. The Nevada judges have become extremely familiar with the newly amended Nevada statutes.

3. The Plaintiff’s Choice of Forum. While Plaintiff filed this action in the Central District of California, it is a Texas corporation that is owned 100% by a Nevada corporation, LNV Corporation. The Plaintiff has no apparent contacts with the State of California.

4. The respective parties’ contacts with the forum state. Here, LNV Corporation is seeking to recover deficiencies relating to three Nevada properties through CXA Corporation, a Texas corporation, each of which properties is owned by a Nevada LLC. The loans in question were issued in Nevada by a Nevada bank, Silver State Bank, pursuant to Nevada real estate laws, foreclosure laws, deed of trust laws, and uniform commercial code laws, not to mention anti-deficiency laws in Nevada. All of the loan documents with two minor exceptions, contain Nevada choice of law provisions and Nevada venue provisions.

5. Contacts relating to the Plaintiff’s cause of action in the chosen forum. In the case at bar, the Plaintiff’s causes of action one through four are on the guarantees. The fifth cause of action relates to specific performance of the assignment of rents and uniform commercial code documents, which will involve Nevada law since all of the tenants reside in Nevada and the personal property that is the subject of the UCC filing is also located in Nevada. Claims six through nine are on the guarantees. Claim 10 is for a deficiency judgment. Claims 11 through 14 are actions on the [following guarantees]. Finally, claim 15 is for a deficiency judgment with respect to loan number _____________.

6. The differences in the costs of litigation in the two forums.

7. The availability of compulsory process to compel attendance of unwilling nonparty witnesses. In this case, the Defendants are currently in the process of locating the whereabouts of the former Bank employees who processed the various loan applications on the three Nevada parcels of real property. It would be unfair if these witness are unwilling to drive five hours to Southern California to force the Defendants to utilize deposition transcript testimony in lieu of live witness testimony.

8. The ease access to sources of proof. In this case, the critical witnesses will include appraisers who are qualified to provide expert witness testimony in Nevada with respect to the value of commercial real estate located in Southern Nevada. Since these witnesses will need to be certified as experts and licensed in Nevada and have intimate familiarity with Nevada market conditions in each of the three neighborhoods involved with these pieces of real property, it is highly unlikely that an expert witness will be located who resides in Los Angeles to provide this service. It is unknown whether the judge or jury will need to inspect the three pieces of property, but if that does become necessary, then obviously it will be necessary to conduct the trial in Southern Nevada where the properties are located just minutes from the Federal courthouse.

9. The presence of a forum selection clause is a significant factor in the Court’s analysis. In this case, each and every one of the approximately 50 loan documents contains a Nevada forum selection clause, which, although not mandatory in its language, clearly should be a significant factor in the Court’s analysis

10. The relevant public policy of the forum state, if any, is at least a significant factor in the § 1404 balancing. In this case, Nevada has a significant public policy with respect to anti-deficiency litigation protecting borrowers, and guarantors, which in this case include all of the Defendants except ,_____.

In the instant case, approximately fifty loan documents were executed in Nevada, the notes and related loan documents were delivered in Nevada, the real property is located in Nevada, the original lender and its witnesses are all located in Nevada, the expert appraisers and related bank witnesses will likely reside in Nevada, Nevada law will apply regarding the UCC, foreclosure and anti-deficiency statutes and case law. The Plaintiff is a Texas corporation, who bought up numerous FDIC loans and is now litigating actions in over fifty cases across the United States. The Plaintiff’s law firm has an office located in Las Vegas, Nevada. Clearly the case should be transferred to the District of Nevada.

In addition to the foregoing, a majority of the documentary proof and bank witnesses which could provide testimony in this case are located in Nevada. The location and convenience of witnesses is considered to be a significant factor in the analysis. The convenience of crucial non-party witnesses is often given more weight than party witnesses because they are not within the control of the parties and cannot be compelled to testify at trial in a distant forum. Gumbo Lining Construction Corp. v. Fireman’s Fund Insurance Co., 844 F.Supp 1163, 1166 (S.D. Texas 1994). [See also, MPH Technologies Oy v. ZyXEL Communications Corp., 10-cv-684, 210 WL 2836734 at 2 (N.D. Ill. July 16, 2010)] and Cook v. Atchison, Topeka and Santa Fe Railway Co., 816 F.Supp 667, 669 (D. Kan. 1993). A number of courts that have considered the matter have determined that the convenience of witnesses is one of the main factors in deciding a § 1404(a) motion to transfer venue. Master Piece Artist Canvass Inc. v. CNA MFG. System, Inc., 1996 W.L. 724788 (N.D. Cal. 1996) (“most significant factor”) A.J. Industries, Inc. v. U.S. District Court from the Central District of California, 503 F.2nd 384 (9th Cir. 1974); Cole v. Desert Media Group, Inc., 1994 W.L. 184622 (N.D. Cal. 1994) (“Maybe the most important factor.”). See also, Royal Lyme Bermuda, Ltd. v. Costal Fragrance, Inc., 1997 W.L. 620840 (S.D.N.Y. 1997) (“properly the most important factor”), and see, In re Eastern District Repetitive Stress Injury Litigation, 850 F.Supp 188 (E.D. N.Y. 1994) (“the most powerful factor”).

Another factor, the cost of attendance to willing witnesses also favors transfer, the courts have recognized that traveling long distances imposes an significant burden on witnesses. The circuit courts have also recognized that monetary expense is not the only burden suffered by witnesses. Such witnesses would also suffer the personal cost of not being with their family and community, and missing work while traveling from Las Vegas to Los Angeles to testify in a trial in that location. Here the key witnesses will include not only the Bank employees who processed the three Nevada loans, but also expert Nevada appraisers who have experience in the Las Vegas commercial market.

Another factor relates to the familiarity of the District of Nevada with the variety of complex Nevada state laws which are going to be applied in this litigation. The State of Nevada has a large body of statutory and case law directly applicable to deficiency cases such as this involving commercial borrowers and guarantors. Those Nevada laws are very different than the laws in the State of California, as explained below in Section C. Consequently, Nevada courts will be better equipped to handle Nevada anti-deficiency statutes and case law, and thus this factor also weighs in favor of transfer. Due to the record foreclosure levels in Nevada, the Nevada legislature has adopted new anti-deficiency protections for guarantors, which the Nevada judiciary considers regularly.

In adopting 28 USC § 1404(a), Congress recognized that in some cases a plaintiff could attempt to gain an unfair advantage over a defendant by abusing Federal jurisdiction and venue rules. In other words, if it were not for § 1404(a), plaintiffs could simply file a lawsuit in the most inconvenient, burdensome and oppressive venue for the defendant and the defendant would then be forced to bear the burden and cost of the unreasonable venue without any recourse. Congress decided to forbid this kind of forum shopping and provided district judges with the power to transfer cases to a more convenient forum, even if jurisdiction and venue were proper in the forum initially chosen by the plaintiff. Pacific Car and Foundry Co. v. Pence, 403 F.2d 949, 954 (9th Cir. 1968).

Section 1404(a) is broader in many respects than the common law doctrine of forum nonconveniens from which it is derived. Section 1404(a) permits a transfer of an action rather than the outright dismissal required by its common law counterpart. Piper Aircraft v. Reyno, 454 U.S. 235, 253, 102 S.Ct. 252, 70 L.Ed. 2d 419, 1982 AMC 214 (1981). Section 1404 has replaced forum nonconveniens in cases where a transfer is sought to another district court. The statute provides the district court with broad discretion to transfer an action in the interest of justice. Commodities Futures Trading v. Savage, 611 F.2d 270, 279 (9th Cir. 1979). As is the case under the common law rule, the moving party bears the burden of establishing that a transfer of venue is proper, however, under § 1404 that burden is substantially less than the transfer under the common law doctrine of forum nonconveniens. Waites v. First Energy Leasing Corp., 605 F.Supp 219 (N.D. Ill. 1985).

The purpose of the statute governing the transfer for convenience of the parties and witnesses is to prevent the waste of time, energy, and money that would result from litigating in an inconvenient forum selected by the Plaintiff. Van Dusen v. Barrack, 376 U.S. 612, 84 S.Ct. 805, 11 L.Ed. 2nd 945 (1964); and Lung v. Yachts International, Ltd., 980 F.Supp 1362 (D.Haw. 1997). Section 1404(a) expresses Congress’ concern that the law should not require a party to answer claims pursuant to a strategy of forcing trial in an inconvenient forum. Piper Aircraft Co. v. Reno, 454 U.S. 235, 102 S.Ct. 252, 70 L.Ed. 2nd 419 (1981).

B. The Plaintiff’s Choice of Forum in California is not a Significant Factor.

In applying the § 1404(a) balancing test, the Court should not consider a Plaintiff’s choice of forum as a significant factor. While in some cases the Court can consider the Plaintiff’s choice of forum as a factor, where neither the Plaintiff nor the Defendant are located in the forum, courts have held that the Plaintiff’s choice of forum is of little consequence. Armstrong v. Home Depot USA, Inc., 1996 W.L. 382895 (N.D. Cal. 1996) (Plaintiff’s choice of forum “has minimum value where none of the conduct occurred in the forum . . . this is particularly true where the Plaintiff is not a resident of the judicial district where he has instituted suit.”)

In the instant case, it is highly relevant as shown on Exhibit ___, that _____Corporation, which has purchased hundreds of millions of dollars worth of mortgages from the FDIC, is currently involved in litigation against borrowers in approximately fifty cases spread throughout the United States. Moreover, it is highly relevant to note, that _____Corporation is a Texas corporation and that it is owned 100% by _____. Indeed, in light of the foregoing facts summarized above, one wonders why the case was filed in California at all.

In the case at bar, some of the critical witnesses will be the bank’s loan officers who handle the various loan transactions and help negotiate and draft the approximately fifty separate loan documents signed by the borrower and multiple guarantors, including two personal guarantors, _______. One of the reasons that these witnesses’ testimonies will be so critical to the litigation, and why the litigation should be conducted in Nevada where the witnesses reside, is that for some unknown reason, the bank’s loan officers revised the choice of governing law provision in three of the fifty loan documents to California law instead of Nevada law. This is highly unusual and the individual guarantors do not recall that being brought to their attention, which is highly relevant inasmuch they were not represented by counsel during the loan negotiations.

What is even more unusual is that the choice of venue clause remained in Nevada throughout all of the approximately fifty loan documents, including the personal guarantees. Since it appears that there have been some deceptive, and predatory lending practices involved in the drafting and revising of the language in the guaranty signed by the two individual guarantors, the Defendants must depose these former bank employees, who are presumably employed at other lending institutions in the Las Vegas area. Moreover, Defendants need those witnesses to testify live at the trial of this matter and not merely produce their deposition transcripts at said trial.

C. Recent Amendments to Nevada’s Anti-Deficiency Statute.

Guarantors of a purchase-money loan on real property in Nevada are entitled to anti-deficiency protections afforded under NRS 40.455 through 40.459, which statutes have historically limited the amount of any deficiency judgment to the lesser of either:

1. The amount by which the amount of the indebtedness which was secured exceeds the fair market value of the property sold at the time of the sale, with interest from the date of the sale, or

2. The amount which is the difference between the amount for which the property was actually sold and the amount of the indebtedness which was secured, with interest from the date of sale.

NRS 40.459 (1)(a) and (b). Last year, the Nevada legislature enacted Nevada Assembly Bill 273, which provides a third subsection with applicability to situations in which a foreclosing lender “acquired the right to obtain the judgment from a person who previously held that right”, such as where an originating lender has sold or transferred a note to a third party.

In such a situation, the deficiency amount is limited (beyond the amounts described in NRS 40.459(1) and (2), described above), to also include the further limitation that any deficiency also be limited as follows:

If the person seeking the judgment acquired the right to obtain the judgment from a person who previously held that right, the amount [of deficiency recoverable is limited by the amount] by which the amount of the consideration paid for that right exceeds the fair market value of the property sold at the time of sale or the amount for which the property was actually sold, whichever is greater, with interest from the date of sale and reasonable costs, whichever is the lesser amount.

NRS 40.95(1)(c).

In other words, if the foreclosing lender paid a discounted amount of, say, $100,000 to acquire a loan with a face value of $125,000 from the originating lender, the foreclosing lender can only collect the difference between the fair market value of the property and the $100,000 amount paid to acquire that loan (as opposed to the difference between the $125,000 face value of the loan and the fair market value). Remember that the lender can only collect the lesser of the amount that would be available under all three (3) of the foregoing scenarios.

In addition to the foregoing limitation on the amount of a deficiency available, the Nevada legislature has also recently enacted new legislation aimed at avoiding the scenario of a lender suing a guarantor without first foreclosing. On June 10, 2011, the following language was added to NRS 40.495:

(4) If, before a foreclosure sale of real property, the obligee commences an action against a guarantor, surety or other obligor, other than the mortgagor or grantor of a deed of trust, to enforce an obligation to pay, satisfy, or purchase all or part of an indebtedness or obligation secured by a mortgage or lien upon the real property:

(a) The court must hold a hearing and take evidence presented by either party concerning the fair market value of the property as of the date of the commencement of the action. Notice of such hearing must be served upon all defendants who have appeared in the action and against whom a judgment is sought, or upon their attorneys of record, at least 15 days before the date set for the hearing.

(Emphasis Supplied). The purpose of the hearing is to allow a guarantor of a loan secured by real property to demonstrate the fair market value of the real property, so that the anti-deficiency protections described above, can be fully calculated before any judgment is issued against the guarantor. Additionally, the amount paid by the Plaintiff to purchase the note is now highly relevant in Nevada.

III. CONCLUSION

A summary of the factors that a court should consider is as follows:

  • Here, jurisdiction and venue of the transferee court is ideal, each of the Nevada defendants are amenable to process in the Nevada transferee court; Nevada offers much easier access to sources of proof and witnesses, including former Bank loan officers and Nevada licensed appraisers;
  • Nevada offers the availability of compulsory process for attendance of unwilling witnesses, such as former Bank employees and Nevada licensed appraisers. See NRS Chapter 645 (Real Estate Appraisers must be licensed in Nevada);
  • Nevada offers the judge or jury the opportunity to view or inspect the three parcels of real property;
  • The Plaintiff’s residence is in Nevada and Texas;
  • Nevada is the place where all of the events and transactions occurred, where the lender, borrower and collateral are all located;
  • The nature of the action to recover a deficiency involves Nevada law, which requires appraisals to determine fair market value of the collateral at certain times, such as the date of the foreclosure sale;
  • The driving distance between transferor and transferee courts is only 4 to 5 hours;
  • The docket conditions of the respective courts shows that Nevada has fewer cases per judge than the _____ District of California;
  • The nature, materiality, and essentiality of testimony to be elicited from witnesses who must be transported is critical to the defense, since two guarantors recently discovered their choice of law clause was changed to California, rather than Nevada like all other loan documents;
  • All Defendants have joined in the motion to transfer venue;
  • The parties’ relative financial ability to bear the expense of trial in either district is that Plaintiff is owned by ________ with an estimated net worth of $_____;
  • The Nevada Courts have substantial familiarity with the applicable Nevada law regarding Nevada’s complex and evolving anti-deficiency legislation and related case law;
  • Little time has elapsed since beginning of the action and there was no delay in filing the motion to transfer venue.

DATED this _____day of November, 20___.

ALBRIGHT, STODDARD, WARNICK & ALBRIGHT

____________________________________

G. MARK ALBRIGHT
WILLIAM H. STODDARD, JR.
ALBRIGHT, STODDARD, WARNICK & ALBRIGHT
801 South Rancho Drive, Suite D-4
Las Vegas, Nevada 89106
Attorney for Defendants

About the Authors: G. Mark Albright is a Partner with the law firm of Albright, Stoddard, Warnick & Albright, an A-V Rated Nevada-based full-service law firm having attorneys licensed in Nevada, California and Utah. Our firm’s practice includes a strong emphasis on litigation in Nevada’s state and federal courts.

Note: This article, and any other information you obtain at this website, is not offered as legal advice, nor should it be relied upon as such, nor is it a solicitation for legal services. Only a licensed attorney can advise you with respect to your specific legal needs. We welcome your contacting our firm to discuss such representation. Contacting us does not create an attorney-client relationship. Please do not send any confidential information to us until such time as an attorney-client relationship has been established.

About the Authors: The law firm of Albright, Stoddard, Warnick & Albright is an A-V Rated Nevada-based full-service law firm having attorneys licensed in Nevada, California and Utah. Our firm’s practice includes a strong emphasis on personal injury accidents. Call us at 702-384-7111.

Note: This article, and any other information you obtain at this website, is not offered as legal advice, nor should it be relied upon as such, nor is it a solicitation for legal services. Only a licensed attorney can advise you with respect to your specific legal needs. We welcome your contacting our firm to discuss such representation. Contacting us does not create an attorney-client relationship. Please do not send any confidential information to us until such time as an attorney-client relationship has been established.