United States District Court, S.D. Alabama, Southern Division
WILLIAM H. STEELE, Chief District Judge.
This matter comes before the Court on defendants' Motion to Dismiss Plaintiff's Complaint and/or Motion to Transfer Venue (doc. 14). The Motion has been briefed and is now ripe for disposition.
I. Relevant Facts.
Plaintiff, SE Property Holdings, LLC ("SEPH"), filed suit in this District Court against six defendants, alleging state-law claims of actual and constructive fraudulent transfer, in violation of Alabama Code §§ 8-9A-4(a) and 8-9A-5(a), and civil conspiracy. Named defendants include Tammy T. Center, both in her individual capacity and as personal representative of the Estate of Charles H. Trammell (the "Estate"); Belinda R. Trammell; Amy T. Brown; Trammell Family Orange Beach Properties, LLC; and Trammell Family Lake Martin Properties, LLC.
The gist of the Complaint is as follows: (i) Charles and Belinda Trammell executed guaranties and (in Charles' case) a promissory note for hundreds of thousands of dollars in loans made by SEPH's predecessor for certain real estate development projects in this judicial district; (ii) the Estate and Belinda Trammell are indebted to SEPH pursuant to those guaranties and the note; (iii) two days after SEPH filed a lawsuit against Charles Trammell and other guarantors concerning the subject loan default and their resulting indebtedness, Charles and Belinda Trammell purported to convey a Perdido Place condominium unit - whose value Charles Trammell had previously declared to be $1.4 million (with no mortgage balance) - to defendant Trammell Family Orange Beach Properties, LLC (which Charles and Belinda Trammell owned and/or controlled), for an alleged $100 in consideration; (iv) on the same date, Charles and Belinda Trammell purported to convey a house on Lake Martin to defendant Trammell Family Lake Martin Properties, LLC (which Charles and Belinda Trammell owned and/or controlled), for less than reasonably equivalent value; and (v) Charles and Belinda Trammell also transferred their interests in certain UPS stock and in the subject LLCs to other relatives for less than reasonably equivalent value.
Upon being served with process, defendants responded by filing their Motion to Dismiss and/or Transfer Venue, through which they argue that (i) venue is improper in this judicial district, requiring dismissal pursuant to Rule 12(b)(3), Fed.R.Civ.P.; and (ii) alternatively, venue is inconvenient in this judicial forum, such that this action should be transferred to the U.S. District Court for the Middle District of Alabama pursuant to the discretionary provisions of 28 U.S.C. § 1404(a). For its part, SEPH vigorously opposes both aspects of this Motion.
II. Defendants' Motion to Dismiss Based on Improper Venue.
As their initial challenge to the Complaint, defendants assert that venue is improper in this District Court and that the case should be dismissed pursuant to Rule 12(b)(3). The applicable statute (the so-called "transactional venue" provision) states that "[a] civil action may be brought in... a judicial district in which a substantial part of the events or omissions giving rise to the claim occurred, or a substantial part of property that is the subject of the action is situated." 28 U.S.C. § 1391(b)(2). The law is clear that "under § 1391 a plaintiff does not have to select the venue with the most substantial nexus to the dispute, as long as she chooses a venue where a substantial part of the events giving rise to the claim occurred." Morgan v. North MS Medical Center, Inc., 403 F.Supp.2d 1115, 1122 (S.D. Ala. 2005) (citations omitted). Nor is the term "substantial part, " as used in § 1391(b)(2), properly construed as a synonym for "majority." See, e.g., Anthony Sterling, M.D. v. Provident Life and Acc. Ins. Co., 519 F.Supp.2d 1195, 1206 (M.D. Fla. 2007) (" Jenkins does not limit the term substantial part to mean the majority of the acts."). It is true that "[o]nly the events that directly give rise to a claim are relevant." Jenkins Brick Co. v. Bremer, 321 F.3d 1366, 1371 (11th Cir. 2003). It is also true, however, that courts "should review the entire sequence of events underlying the claim." Mitrano v. Hawes, 377 F.3d 402, 405 (4th Cir. 2004) (citations and internal quotation marks omitted); see also Astro-Med, Inc. v. Nihon Kohden America, Inc., 591 F.3d 1, 12 (1st Cir. 2009) (similar); Cox v. Sullivan, 2014 WL 4352088, *3 (N.D. Okla. Sept. 2, 2014) (for purposes of § 1391(b)(2), "courts are instructed to focus on the entire sequence of events giving rise to the claim, rather than merely where the triggering event' occurred").
After careful review of the parties' arguments and factual submissions, the Court readily concludes that transactional venue is properly laid in this forum. Under any reasonable, common-sense reading of the statute and the Complaint, "a substantial part of property that is the subject of the action is situated" in this judicial district. Again, SEPH brought this action under Alabama fraudulent transfer statutes, seeking relief to include the setting aside of certain transfers of property made by Charles and Belinda Trammell. One such item whose transfer SEPH seeks to set aside is unit 501 of Perdido Place, a condominium located in this judicial district and valued (according to the Complaint) at $1.4 million with no mortgage balance. This $1.4-million condominium unit plainly constitutes "a substantial part of property that is the subject of the action, " thereby giving rise to transactional venue under a straightforward, common-sense application of § 1391(b)(2).
Even if the "substantial part of property" prong of the transactional venue statute were not satisfied here (which it is), the Court agrees with SEPH that venue would lie under the "substantial part of the events or omissions giving rise to the claim" alternative set forth in § 1391(b)(2). Considering the entire sequence of events giving rise to SEPH's fraudulent transfer claims, as required by applicable case authorities, events occurring in this district did indeed play a substantial role in SEPH's claims. Under the Alabama Uniform Fraudulent Transfer Act, relief against a transfer is available only to creditors. See Ala. Code § 8-9A-7(a). A "creditor" is a defined term in the Act, meaning "[a] person who has a claim." Ala. Code § 8-9A-1(4). And a "claim" is defined as a "right to payment." Ala. Code § 8-9A-1(3). Thus, an essential element of proof in SEPH's fraudulent transfer causes of action is that it has a "right to payment" from the Estate and Belinda Trammell. There is no dispute that the events giving rise to this purported right to payment overwhelmingly transpired in this judicial district. For example, the underlying loans were made by SEPH's predecessor in this judicial district for real estate development projects to occur in (or within a mile of) this judicial district. (Braswell Aff. (doc. 18, Exh. A), ¶¶ 5-9, 12-13.) Charles and Belinda Trammell executed guaranties for these loans in favor of SEPH's predecessor in this judicial district, and specifically agreed that venue for causes of action arising out of or in connection with those guaranties would be courts in Mobile County or Baldwin County, both locations within this judicial district. (Doc. 18, Exh. A-1, at 3, 5, 8, 10, 13, 15-16, 19, 21; Exh. A-2, at 3, 5-6, 9, 11.) The same is true of the note executed by Charles Trammell. (Doc. 18, Exh. A-4, at 2, 8.) The point is straightforward: The right to payment which forms the backbone of SEPH's fraudulent transfer claims came into being in this judicial district. Moreover, SEPH's evidence is that its actual fraudulent transfer claims will rely on evidence of acts and omissions within this judicial district such as (i) Charles and Belinda Trammell "retained possession or control" of the Perdido Place condominium after its transfer, Ala. Code § 8-9A-4(b)(2); (ii) Charles and Belinda Trammell omitted to notify SEPH's predecessor (whose offices were in this judicial district) of the transfers, Ala. Code § 8-9A-4(b)(3); (iii) the transfers were made only after SEPH filed a lawsuit against the Trammells in this judicial district, Ala. Code § 8-9A-4(b)(4); and (iv) the transfers took place before the Trammells' debt had been reduced to judgment in this judicial district, Ala. Code. § 8-9A-4(b)(10). Finally, one of the assets that SEPH claims was fraudulently transferred is a $1.4 million condominium located within this judicial district.
Of course, defendants maintain that they all live in the Middle District of Alabama and that all paperwork effectuating the challenged transfers was prepared, executed, and in some cases recorded in the Middle District of Alabama, particularly at locations in Autauga County, Elmore County and Montgomery County. Be that as it may, the proper question for purposes of transactional venue is not which district has the strongest or most direct ties to the commission of the alleged wrongs ( i.e., the district containing the lawyer's offices and financial advisers' offices in which the allegedly fraudulent transfers were planned and carried out), but is rather whether the judicial district selected by SEPH is where a "substantial part of the events or omissions giving rise to the claim" took place. Under § 1391(b)(2), there are scenarios "in which venue will be proper in two or more districts." Jenkins Brick, 321 F.3d at 1371. This is one of them. Under the facts and circumstances presented here, the Court concludes that transactional venue is proper in this judicial district because a substantial part (albeit not the majority or, perhaps, the most crucial part) of the events and omissions giving rise to SEPH's fraudulent transfer claims occurred in the Southern District of Alabama.
Because venue properly lies in this judicial district under each distinct prong of the transactional venue statute, Defendants' Motion to Dismiss Plaintiff's Complaint for improper venue pursuant to Rule 12(b)(3) is DENIED.
III. Defendants' Motion for Discretionary Transfer of Venue.
In the alternative, defendants move for transfer of venue to the U.S. District Court for the Middle District of Alabama. The applicable statute provides that, "[f]or 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." 28 U.S.C. § 1404(a). "District courts have broad discretion in deciding whether to transfer an action to a more convenient forum." Continental Motors, Inc. v. Jewell Aircraft, Inc., 882 F.Supp.2d 1296, 1312 (S.D. Ala. 2012) (citations omitted). "[I]n the usual motion for transfer under section 1404(a), the burden is on the movant to establish that the suggested forum is more convenient." In re Ricoh Corp., 870 F.2d 570, 573 (11th Cir. 1989); see also Osgood v. Discount Auto ...