United States District Court, S.D. Alabama, Southern Division
July 21, 2015
SE PROPERTY HOLDINGS, LLC, Plaintiff,
TAMMY T. CENTER, et al., Defendants.
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 Parts, LLC, 981 F.Supp.2d 1259, 1263 (S.D. Fla. 2013) ("The burden is ultimately on the party moving for transfer to establish that another district is a more convenient forum than the plaintiff's chosen forum.").
There appears to be no reasonable dispute that venue would be proper in the Middle District of Alabama. As such, the § 1404(a) inquiry here focuses on whether defendants have established that the Middle District of Alabama is a more convenient forum than the Southern District of Alabama, and whether the interests of justice favor such a transfer. See Continental Motors, 882 F.Supp.2d at 1313 ("[O]nce it is established that the action could originally have been brought in the proposed transferee forum..., courts examine whether a balancing of the convenience of the parties and the interest of justice favors transfer in the specific case.") (citation and internal quotation marks omitted). Relevant factors in that balancing process include "(1) the convenience of the witnesses; (2) the location of relevant documents and the relative ease of access to sources of proof; (3) the convenience of the parties; (4) the locus of operative facts; (5) the availability of process to compel the attendance of unwilling witnesses; (6) the relative means of the parties; (7) a forum's familiarity with the governing law; (8) the weight accorded a plaintiff's choice of forum; and (9) trial efficiency and the interests of justice, based on the totality of the circumstances." Manuel v. Convergys Corp., 430 F.3d 1132, 1135 n.1 (11th Cir. 2005). "Given the deferential, case-specific nature of the inquiry, the foregoing factors are not applied in a rote, mechanical way, nor are they an exhaustive, all-encompassing catalogue of permissible considerations." Baker v. RBS Worldpay, Inc., 2010 WL 4065074, *2 (S.D. Ala. Oct. 15. 2010).
A prominent factor in the § 1404(a) analysis is the plaintiff's choice of forum. See, e.g., Robinson v. Giarmarco & Bill, P.C., 74 F.3d 253, 260 (11th Cir. 1996) ("The plaintiff's choice of forum should not be disturbed unless it is clearly outweighed by other considerations."). SEPH elected to commence this fraudulent transfer action in the Southern District of Alabama, and that election will not lightly be cast aside. To be sure, defendants have cited unpublished authority positing that the weight of this factor is attenuated where "the operative facts underlying the cause of action did not occur within the forum chosen by Plaintiff." (Doc. 14-1, at 8-9.) Even assuming (without deciding) that these unpublished district-court decisions have persuasive value as to this principle, this is simply not such a case. As explained in detail supra, many of the operative facts and circumstances animating SEPH's fraudulent transfer lawsuit did take place in this judicial district. This factor weighs against transfer.
Next, defendants suggest that transfer is warranted to promote the convenience of the witnesses and parties, which is undoubtedly an important consideration. See, e.g., Bartronics, Inc. v. Power-One, Inc., 510 F.Supp.2d 634, 637-38 (S.D. Ala. 2007) ("courts have recognized that, aside from the plaintiff's own choice of forum, the most important factor in passing on a motion to transfer under § 1404(a) is the convenience of the witnesses") (citations and internal quotation marks omitted). With regard to convenience of the witnesses, defendants object that the Southern District of Alabama is inconvenient for defense witnesses Robert Burton (an attorney with an office in Autauga County, Alabama, who prepared the warranty deeds for the challenged transfers of the Lake Martin house and the Perdido Place condominium unit) and Daryl Greer (a financial advisor with an office in Autauga County, Alabama, who processed the challenged transfer of Charles Trammell's UPS stock). But defendants have made no showing that these witnesses are critically important to the defense, that defendants expect to call Burton and Greer to testify live at trial, or that these witnesses consider the Southern District of Alabama forum to be inconvenient or burdensome to any material degree. Defendants have not even presented evidence that Burton resides in the Middle District of Alabama, only that he has an office there. On this showing, the Court cannot find that the convenience of the witnesses strongly favors transfer.
As for convenience of the parties, defendants first cite the age (69) and medical conditions (knee replacement, vertigo, hypertension, etc.) of defendant Barbara Trammell, who resides in the Middle District of Alabama. (Trammell Dep. (doc. 14, Exh. A), ¶¶ 1, 3.) But defendants make no showing beyond a conclusory allegation that travel to Mobile for trial would be onerous for Ms. Trammell because of her health conditions. On the opposite side of the ledger, plaintiff's evidence is that Ms. Trammell signed multiple documents agreeing to a Mobile County or Baldwin County venue for litigation relating to her loan guaranties underlying the alleged fraudulent transfers. (Doc. 18, Exh. A-1, at 13, 15, 19, 21; Exh. A-2, at 3, 5, 9, 11.) Having done so, Ms. Trammell cannot be heard to complain that this judicial district is less convenient for her than the Middle District of Alabama. See, e.g., Atlantic Marine Const. Co. v. U.S. Dist. Court for Western Dist. of Texas, ___ U.S. ___, 134 S.Ct. 568, 582, 187 L.Ed.2d 487 (2013) ("When parties agree to a forum-selection clause, they waive the right to challenge the preselected forum as inconvenient or less convenient for themselves or their witnesses, or for their pursuit of the litigation.").
Nor do defendants successfully bolster their "inconvenience" argument by pointing to evidence that defendants Tammy T. Center and Amy T. Brown (apparently the adult daughters of Charles and Belinda Trammell) live in the Middle District of Alabama, are mothers of middle-school and high-school aged children, and have responsibilities to their respective children and husbands in the form of "daily transportation and domestic support" for extracurricular activities, homework, meals, cleaning, and so on. (Center Decl. (doc. 14, Exh. C), ¶ 3; Brown Decl. (doc. 14, Exh. B), ¶ 3.) Nothing in these declarations demonstrates that defendants Center and Brown would suffer material hardship if this action were to remain pending in the Southern District of Alabama. They do not explain why their spouses or high-school aged children could not temporarily cover for them with regard to these "daily transportation and domestic support" obligations during the trial of this action. For that matter, they do not explain why they would be unable to make the approximately 160-mile drive between Mobile and Montgomery County as needed during the trial to accommodate and balance competing family and trial responsibilities. And many of the purported inconveniences and disruptions to their daily household routines would appear comparable regardless of whether this action moves forward in the Middle District or the Southern District of Alabama.
In short, defendants have not made a compelling case that the convenience of the parties favors transfer of this action to the Middle District of Alabama. To be sure, the Court does not doubt that defendants would find it more convenient to litigate this action in their home forum; however, a § 1404(a) transfer is not appropriate where its result would be merely to shift the inconvenience from one side to the other. The Court will not grant a transfer under § 1404(a) based on convenience of the parties, where (i) defendants have not shown that it would pose a substantial hardship for them if this action were to proceed in this District Court; (ii) the distance between the present forum and the proposed transferee forum is less than 200 miles, thereby mitigating the hardship to any defendant (or witness, for that matter) living in the Middle District; and (iii) plaintiff would be incrementally inconvenienced to a similar and offsetting degree if the transfer occurred.
The remaining pertinent factors may be dispatched expeditiously. The location of documents is a neutral factor. Documents relating to the challenged property transfers are located in the Middle District of Alabama, but underlying loan/guaranty documents are located in this judicial district. Neither collection of files appears voluminous, nor is there any indication that it would be burdensome or impracticable to ship either set of documents from one forum to the other. The "locus of operative facts" factor is likewise a wash, for the reasons discussed in Section II, supra ( i.e., that significant and substantial operative facts occurred in each district). While defendants trumpet the "availability of process" factor as favoring transfer in this case, the Court disagrees. Defense witnesses Burton and Greer may or may not be outside the reach of defendants' trial subpoena capabilities under Rule 45. Even if they were, defendants have made no showing that either of these witnesses would be unwilling to attend judicial proceedings in this matter without court compulsion, much less that no reasonable alternative arrangements are available to secure their trial testimony. On this showing, the "availability of process" factor does not weigh in favor of transfer. There is no indication that the relative means of the parties, the familiarity of the respective fora with governing law, or trial efficiency would meaningfully favor one forum over the other.
As stated previously, it is defendants' burden to establish that the proposed transferee forum (the Middle District of Alabama) is more convenient than that selected by plaintiff. The Court is of the opinion that defendants have not met this burden. SEPH's choice of forum is entitled to deference. Defendant Belinda Trammell agreed to this forum in underlying contractual documents. One of the two parcels of allegedly fraudulently transferred real property is located in this judicial district, and all of the facts pertaining to SEPH's "right to payment" (and its efforts to enforce same, which allegedly triggered the challenged transfers) arose in this judicial district. Defendants Center and Brown demonstrate no more than mild inconvenience/disruption that would afflict them if trial were to be held in this judicial district. And the proposed transferor and transferee courthouses are within sufficient geographic proximity that any modest inconvenience defendants or their witnesses may incur in the absence of a transfer is attenuated. Of course, "modern methods of transportation and communication have lessened the burden of defending a suit in a foreign jurisdiction." Mutual Service Ins. Co. v. Frit Industries, Inc., 358 F.3d 1312, 1320 (11th Cir. 2004). Defendants have not established that they would be substantially burdened by being forced to defend against this action here. Because defendants have not shown that the convenience of the parties and witnesses favor transfer with sufficient force to overcome the deference assigned to plaintiff's choice of forum, and because the interests of justice do not favor transfer in the circumstances presented here, the Court declines defendants' request for discretionary transfer of venue pursuant to § 1404(a).
For all of the foregoing reasons, Defendants' Motion to Dismiss Plaintiff's Complaint and/or Motion to Transfer Venue (doc. 14) is DENIED in its entirety. Defendants are ORDERED to file answers to the Complaint on or before August 4, 2015.