SunSouth Bank v. NashYork, LLC et al
OPINION AND ORDER, it is the ORDER, JUDGMENT and DECREE of the Court that the 10 motion to dismiss or transfer is granted to the extent that this case is transferred to the Northern District of Florida; directing the clerk to take appropriate steps to effect the transfer; this case is closed in this court. Signed by Honorable Judge Myron H. Thompson on 2/11/13. Furnished to calendar group & AG (terminates Final Pretrial 02/11/2014 and Non-Jury Trial 3/10/2014)(djy, )
IN THE DISTRICT COURT OF THE UNITED STATES FOR THE
MIDDLE DISTRICT OF ALABAMA, SOUTHERN DIVISION
NASHYORK, LLC; et al.,
CIVIL ACTION NO.
OPINION AND ORDER
Plaintiff SunSouth Bank brought this lawsuit seeking
to recover an outstanding debt and naming as defendants
NashYork, LLC (a debtor of the bank) and four individual
guarantors of NashYork’s loan (Dwight P. Wiles, James C.
Stroud, Herbert L. Graham, and Elliot Levine).
matter jurisdiction is proper under 28 U.S.C. § 1332
The case is now before this court on the
defendants’ motion to dismiss or transfer venue from the
Middle District of Alabama to the Northern District of
For the reasons that follow, the court will
transfer the case.
SunSouth Bank, which is located in Dothan, Alabama,
made a large loan to NashYork, a company organized under
the laws of Florida, for the purpose of purchasing and
developing certain property in Bay County, Florida.
individual managers (including the defendants in this
case, Wiles, Stroud, Graham, and Levine) each separately
guaranteed differing portions of the loan should the
company fail to repay it.
After some time, relations between SunSouth Bank and
Three of NashYork’s managers other than the
defendants in this case (the Joseph Flom estate, Jason
Flom, and Elizabeth Yates), who also guaranteed portions
of SunSouth’s loan to NashYork, instituted a lawsuit in
a Florida state court against the bank.
NashYork and themselves into transactions that were to
their detriment and the bank’s and Gilley’s benefit.
SunSouth Bank removed the case to the U.S. District Court
for the Northern District of Florida on the basis of
diversity jurisdiction, denied the allegations against
it, and counterclaimed against the individual guarantors
See Estate of Flom v. SunSouth, No. 3:12-cv-
288 (N.D. Fla. removed June 14, 2012).
Several months after the Florida case was removed to
federal court, SunSouth Bank filed this lawsuit in an
Alabama state court, seeking to recover against NashYork
for its debt and against Wiles, Stroud, Graham, and
Levine for their separate guarantees.
removed the case to this court on the basis of diversity
defendants now move to dismiss the lawsuit for lack of
alternatively, to transfer the lawsuit to the Northern
District of Florida to provide that court with the option
of consolidating the suit with the pending case there.
Because this court will transfer the case, it does not
reach the personal-jurisdiction and other issues.
28 U.S.C. § 1404(a), “For the convenience of
the 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.”
In deciding whether to transfer a case, courts weigh
1533785, at *1 (M.D.Ala. May 1, 2012) (Thompson, J.).
However, where the case before the court substantially
overlaps with a different case pending in another federal
court, special considerations apply.
“Where two actions involving overlapping issues and
parties are pending in two federal courts, there is a
favors the forum of the first-filed suit under the firstfiled rule.”
Manuel v. Convergys Corp., 430 F.3d 1132,
1135 (11th Cir. 2005) (citations omitted); see also 15
Charles Alan Wright & Arthur R. Miller, Federal Practice
applying the first-filed rule).
For the first-filed rule
to apply, the two cases need not be identical; rather,
“[t]he crucial inquiry is one of ‘substantial overlap.’”
Save Power Ltd. v. Syntek Finance Corp., 121 F.3d 947,
950 (5th Cir. 1997).
Once a party has shown that a
substantially overlapping case is pending in another
federal court and requests that the instant case be
“‘compelling circumstances’ to warrant an exception to
the first-filed rule.”
Manuel, 430 F.3d at 1135.
compelling circumstances are not established, the court
should transfer the case to the first-filed forum.
Cadle Co. v. Whataburger of Alice, Inc., 174 F.3d 599,
606 (5th Cir. 1999) (holding that the lower court erred
by dismissing the case instead of transferring it).
court in the first-filed forum may, but is not required
See Fed. R. Civ. P. 42(a)
to, consolidate the cases.
(“If actions before the court involve a common question
judicial administration and conservation of resources.”
First City Nat. Bank and Trust Co. v. Simmons, 878 F.2d
76, 79 (2d Cir. 1989).
“The concern manifestly is to
avoid the waste of duplication, to avoid rulings which
may trench upon the authority of sister courts, and to
avoid piecemeal resolution of issues that call for a
Cadle Co., 174 F.3d at 603 (quotation
marks and citation omitted).
Here, there is clear substantial overlap between this
case and the Florida lawsuit.
Both cases arise out of
the same loan and related transactions between SunSouth
Bank and NashYork.
When that loan was made, various
capacities guaranteed the loan (in separate agreements
and with respect to different amounts).
Now, the bank
seeks to recover on those transactions.
In both cases,
the key issues are the viability of the various loan and
guarantors’ allegations of fraud.
See Mfrs. Hanover Trust Co. v.
Palmer Corp., 798 F. Supp. 161, 165-168 (S.D.N.Y. 1992)
(Haight, J.) (reaching the same conclusion on similar
against competing claims of lender liability).
sound judicial administration calls for this court to
transfer the case to the Northern District of Florida,
materially differ or establishes that, despite the cases
warrant separate adjudication.
transfer are not availing.
First, the bank argues that
except for the bank, the parties are different.
that is true, that fact is not sufficiently material to
“Complete identity of parties is not
Save Power Ltd., 121 F.3d at 951.
differ, they all stand in relation to the bank in the
They include NashYork (the bank’s debtor) and
different amounts to SunSouth,” Pl.’s Br. (Doc. No. 12)
at 5, the bank is, essentially, quibbling over minor
See Mfrs. Hanover Trust Co., 798 F. Supp.
at 167 (“[O]bsessing over slight differences between
actions does not promote judicial economy.”).
Bank’s assertion that the two sets of guarantors “are
only similar in that they owe money to SunSouth,” Pl.’s
Br. (Doc. No. 12) at 5, is an obvious understatement.
There appears to be no reason (and the bank has asserted
none) that guarantors in this case could not be joined
with the guarantor-plaintiffs in the Florida case.
Second, SunSouth Bank argues that the anticipated
claims defendants here have against it and the claims of
plaintiffs in the Florida case “are not identical” in
that “They are based upon different communications and
nothing more to explain how the claims differ.
been stated, NashYork and the guarantors have established
a prima-facie case of substantial overlap, and the burden
now lies with SunSouth Bank to rebut that showing.
bank’s vague and conclusory assertions that these cases
invitation to guess what differences the bank may have
had in mind.
Moreover, the bank’s argument that the
incorrectly states the operable legal standard.
however, require that cases be identical.
inquiry is one of ‘substantial overlap.’”); see also
Mfrs. Hanover Trust Co., 798 F. Supp. at 167 (“The
interests of justice require that the cases be related,
Third, SunSouth Bank argues that this court should
deny transfer because the guarantor-defendants in this
case have claims against the guarantor-plaintiffs in the
Florida case relating to their comparative obligations to
repay NashYork’s debt.
Rather than being a reason to
deny transfer, as the bank argues, that fact, if true,
The Federal Rules of Civil Procedure favor the
efficient resolution of all related “claim[s] arising out
of the [same] transaction or occurrence” in a single
(crossclaims against coparties).
That the guarantors in
this case and the guarantors in the Florida case may have
claims against one another highlights the substantial
overlap between the two cases.
Fourth, SunSouth Bank expresses concern that, if this
case were transferred to Northern District of Florida,
the defendants may then contest that court’s personal
jurisdiction over them.
to fear as much.
But, the bank has little reason
“Because the requirement of personal
jurisdiction represents first of all an individual right,
it can, like other such rights, be waived.”
of Ireland, Ltd. v. Compagnie des Bauxites de Guinee, 456
U.S. 694, 703 (1982).
The defendants’ motion to transfer
this case to the Northern District of Florida surely
constitutes a waiver of any rights the defendants may
have otherwise had to avoid appearing there.
different case against the defendants brought in the
Northern District of Florida, the defendants argued that
the forum was inconvenient and that, according to the
transferring to the professedly inconvenient court.
the defendants point out, the court in Florida rejected
initial appearances in Florida were inconvenient at that
time, now that they are already subject to jurisdiction
there, transferring this case to the same court promotes
defendants are concerned).
While it is true that this
weighing a motion to transfer,” Valley Enter. of Ohio LLC
v. Gainey Transp. Serv., 2008 WL 4279601, at *2 (N.D.
identifies no particular hardships that outweigh all
other considerations warranting transfer under the firstfiled rule.
See Z-Man Fishing Prods., Inc. v. Applied
Elastomerics, Inc., 2006 WL 3813707, at *4 (D.S.C. Dec.
27, 2006) (Houck, J.) (“[T]he first-filed rule shifts the
burden of persuasion to [the party opposing transfer] to
demonstrate that the weight of the factors relating to
the convenience of the witnesses and parties balances in
favor of litigating the action in the second forum.”).
In sum, based on the evidence before this court, this
case appears to overlap substantially with the pending
lawsuit in Florida.
Because SunSouth Bank has not shown
otherwise and neither has it shown reason not to apply
lawsuit to the Northern District of Florida.*
* The court expresses no judgment on the defendants’
arguments for dismissing or transferring this case
besides those relating to the first-filed rule.
Accordingly, it is the ORDER, JUDGMENT, and DECREE of
the court that the motion to dismiss or transfer (Doc.
No. 10), filed by defendants NashYork, LLC, Dwight P.
Wiles, James C. Stroud, Herbert L. Graham, and Elliot
Levine, is granted to the extent that this case is
transferred to the Northern District of Florida.
appropriate steps to effect the transfer.
This case is closed in this court.
DONE, this the 11th day of February, 2013.
/s/ Myron H. Thompson
UNITED STATES DISTRICT JUDGE
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