Managed Protective Services Incorporated v. CREDO Petroleum Corporation et al

Filing 31

ORDER that Defendant's 18 Motion for Transfer of Venue is DENIED. IT IS FURTHER ORDERED that Plaintiff's 21 Motion for Venue Discovery, 24 Motion for Surreply, and 27 Motion to Strike are DENIED AS MOOT. Signed by Judge G Murray Snow on 8/9/2012.(LFIG)

1

WO

2
3
4
5
UNITED STATES DISTRICT COURT

6
7

DISTRICT OF ARIZONA

8

No. CV-12-00080-PHX-GMS

Managed Protected Services, Incorporated,
legally-appointed Guardian and
Conservator for protected person:
conservator for Craig Allen Winjum

9
10

ORDER

11
Plaintiff,

12

v.

13

CREDO Petroleum Corporation, a
Delaware Limited Liability Company; et
al.,

14
15

Defendants.

16
17

Pending before the Court are Defendant CREDO Petroleum Corp.’s motion to

18

change venue (Doc. 18) and, in opposition, Plaintiff Managed Protective Services, Inc.’s

19

motions for venue discovery (Doc. 21), and motion for surreply (Doc. 24). Defendant

20
21

CREDO has also filed a motion to strike (Doc. 27), in response to this latter motion by

22

Plaintiff. For the reasons stated below, the Court denies Defendant’s motion for venue

23

transfer (Doc. 18), and denies as moot the other motions above.1

24
25
26

1

Plaintiffs’ request for oral argument is denied because the parties have had an adequate
opportunity to discuss the law and evidence and oral argument will not aid the Court’s
decision. See Lake at Las Vegas Investors Group, Inc. v. Pac. Malibu Dev., 933 F.2d 724,
729 (9th Cir. 1991).
1

1

BACKGROUND

2

In March 2010, CREDO Petroleum Corp. (“CREDO”) entered into a written

3

contract to buy and sell real estate with Craig Allen Winjum, the probable owner of eighty

4

(80) acres of real property located in Dunn County, North Dakota. (Doc. 17, ¶¶ 13–14).

5
6
7
8
9

Five months after this contract was executed, Mr. Winjum executed a Warranty Deed for
the same property. (Doc. 17, ¶ 20).
Mr. Winjum has had a history of behavioral, health and substance abuse issues,
which “significantly affect his judgment and decision making abilities” and which render

10
11

him “peculiarly susceptible to being taken advantage of or being exploited.” (Doc. 17, ¶¶

12

24–29, 32). Fifteen months after the execution of the contract, in August 2011, Managed

13

Protective Services (“MPS”) was appointed Mr. Winjum’s Guardian and Conservator.

14

(Doc. 17, ¶ 2). In October 2011, MPS petitioned the Superior Court of Arizona to

15
16

invalidate the contract and Warranty Deed. (Doc. 17, ¶ 37). MPS requests the Court

17

restore legal title to Mr. Winjum, or to provide some other equitable relief to permit Mr.

18

Winjum to avoid and invalidate the property transfer, and to do so without requiring Mr.

19

Winjum to restore any benefit or consideration because, inter alia, CREDO and its agents

20
21
22

“knew or should have known of Winjum’s impairment and incompetency at the time of
contracting.” (Doc. 17, ¶ 37).

23

Prior to being contacted by CREDO’s agent, Mr. Kemp, Mr. Winjum was unaware

24

of his ownership of the land, which had previously belonged to his brother, who died

25
intestate. (Doc. 22 at 2; Doc. 17, ¶ 35). Mr. Kemp, “a resident of South Dakota and
26
experienced North Dakota landman,” (Doc. 18 at 3) placed several calls into Arizona
2

1

(Doc. 18 at 3), and travelled to Arizona for the execution of both the Contract and the

2

Warranty Deed with Mr. Winjum. (Doc. 18 at 3).

3
4

DISCUSSION

5

As the land in question is located in North Dakota, Defendants have moved for

6

venue transfer. (Doc. 18). Plaintiff has opposed the venue transfer and, in the alternative,

7

has moved for limited discovery on the question of venue. (Docs. 20, 24). For the reasons

8
9
10
11
12

stated below, the Court denies Defendants’ motion.
I.

Legal Standard
“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

13
14

have been brought.” 28 U.S.C. § 1404(a). Defendants argue that this case should be

15

transferred to the District of North Dakota because the action could have been brought in

16

that district and because the balance of factors counsels that it would be more convenient

17

and fair to litigate this matter there. (Doc. 18). Plaintiff does not dispute that this action

18
19

could have been brought in the District of North Dakota, but rather disputes only that the

20

balance of factors suggests that it is more convenient and fair to litigate this case in the

21

District of Arizona. (Doc. 20). The Court must therefore determine whether CREDO has

22

made “a strong showing of inconvenience to warrant upsetting [Plaintiffs'] choice of

23
24
25

forum.” Decker Coal Co. v. Commonwealth Edison Co., 805 F.2d 834, 843 (9th
Cir.1986).

26

3

1

Such a determination requires the weighing of several factors: (1) the convenience

2

of the parties, (2) the convenience of witnesses, (3) the availability of compulsory process

3
4

to compel unwilling witness attendance, (4) the availability of witnesses and their live

5

testimony at trial, (5) the ease of access to sources of proof, (6) the differences in the costs

6

of litigation in the two forums, (7) contacts with the chosen forum, (8) jurisdiction over

7

the parties, (9) the state most familiar with the governing law, and (10) the relevant public

8
9

policy of the forum state. See 28 U.S.C. § 1404(a); Sparling v. Hoffman Constr. Co., 864

10

F.2d 635, 639 (9th Cir. 1988); Decker Coal, 805 F.2d at 843; Costco Wholesale Corp. v.

11

Liberty Mut. Ins. Co., 472 F. Supp. 2d 1183, 1196 (S.D. Cal. 2007); Jones v. GNC

12

Franchising, Inc., 211 F.3d 495, 498–99 (9th Cir. 2000).

13
II.

Analysis

14
15

Setting aside those factors which are neutral or near equivalent between the parties,

16

the Court finds that the relevant factors in this case are (1) the convenience of the parties

17

and (2) witnesses, (3) the availability of compulsory process, (4) the forum selection

18

clause and relative financial burdens, and (5) the interests of justice.

19
20
21
22
23

A.

Private Interests
1.

Plaintiff’s Choice of Forum and Convenience of Parties

Plaintiff’s choice of forum is to be given “substantial deference” where the plaintiff
has chosen its home forum. Reiffin v. Microsoft Corp., 104 F. Supp. 2d. 48, 52 (D.D.C.

24
25
26

2000). “A court should not lightly disturb a plaintiff’s choice of forum. This is especially
true where the forum plaintiff chose is not only his domicile but also has a significant

4

1

connection with the subject matter of the case.” Holder, 1997 WL 14339, at *8 (citation

2

omitted); see Int’l Comfort Prods., Inc. v. Hanover House Indus., Inc., 739 F. Supp. 503,

3
4

506 (D. Ariz. 1989) (“International’s choice of forum will not lightly be disturbed and

5

may prove significant if International’s contacts with Arizona are significant.”).

6

Defendant “must make a strong showing of inconvenience to warrant upsetting

7

[P]laintiff’s choice of forum.” Decker Coal, 805 F.2d at 843 (emphasis added).

8
9

Plaintiff in this case has chosen Mr. Winjum’s home forum which, given both the

10

agent’s phone calls and travel into the forum, (Doc. 20 at 56, 10), and that it was the

11

location of the Contract negotiation and execution, has “significant connection with the

12

subject matter of the case.” This factor is not, by itself, dispositive, Impra Inc. v. Quinton

13
Instruments Co., 17 USPQ2d 1890, 1891 (D. Ariz. 1990). Either party in this case would
14
15

be inconvenienced by litigation in the other’s chosen forum. Each has extensive contacts

16

in its chosen forum and minimal contacts in the forum of the others’ choosing. However,

17

this factor, given the limited number of parties involved, and the preference for the

18

Plaintiff’s choice of forum, weighs in favor of Plaintiff.

19
20

2.

Convenience and Availability of Witnesses

21

Nor does the convenience of witnesses change the balance of private interests.

22

Each party has indicated that a number of material witnesses would be inconvenienced by

23

having to travel to another forum. Given that this case will take place either in North

24
25
26

5

1

Dakota or Arizona, and that the parties have identified witnesses in both states, it appears

2

that both party and non-party witnesses will need to travel cross-country to testify. 2

3
In Herbert Ltd. P’ship v. Elec. Arts Inc., a contract dispute, the court found that

4
5

“more witnesses with more material testimony” specific to the disputed contract were

6

located in California, and that this was a relevant factor in granting defendant’s request to

7

transfer venue to that state. 325 F. Supp. 2d 282, 288 (S.D.N.Y. 2004). Here, however, the

8
9

balance of witnesses with material testimony specific to the disputed contract weighs in

10

favor of not transferring venue. As in Herbert, this case appears to stand or fall on

11

contract issues: it appears that resolution will turn on Mr. Winjum’s competence to enter

12

into the contract. If Mr. Winjum was clearly incompetent at the time of the negotiations

13
and execution, then Plaintiff may have established a case of constructive trust. See, e.g.,
14
15

Wildfang-Miller Motors, Inc. v. Miller, 186 N.W.2d 581 (N.D. 1971) (recognizing

16

constructive trusts in North Dakota law); Condos v. Felder, 92 Ariz. 366, 371, 377 P.2d

17

305, 308 (1962) (recognizing same in Arizona law). MPS has identified witnesses with

18
19
2

20
21
22
23
24
25
26

Defendants did not identify several witnesses until their Reply. This Court does not
address this and other arguments made for the first time in the Reply brief, as it is unfair
to deprive Plaintiff of the opportunity to respond. See Delgadillo v. Woodford, 527 F.3d
919, 930 n. 4 (9th Cir. 2008) (“Arguments raised for the first time in [the] reply brief are
deemed waived.”); Marlyn Nutraceuticals, Inc. v. Improvita Health Prods., 663 F.
Supp.2d 841, 848 (D. Ariz. 2009) (“The Court need not consider Defendants’ position,
however, since it was first raised in their reply brief . . . . Thus, even if the argument has
merit, this Court cannot appropriately consider it, since Plaintiffs did not have the
opportunity to respond.”) From Defendant’s original motion, however, it appears that
legal counsel in North Dakota involved in settling the estate may be a North Dakota-based
witness for Defendant. (Doc. 18 at 3).

6

1

relevant knowledge located in Arizona, who can testify to Mr. Winjum’s mental health,

2

including Mr. Winjum’s treating psychologist and other acquaintances of Mr. Winjum.

3
4
5

Overall, the Court concludes that more witnesses with more material testimony reside in
Arizona than do in North Dakota.

6

3.

7

Availability of Compulsory Process and Live Testimony

The “availability of process to compel the testimony of important witnesses is an

8
9

important consideration in transfer motions.” Arrow Elecs., Inc. v. Ducommun, Inc., 724

10

F. Supp. 264, 266 (S.D.N.Y. 1989). In this case, all of CREDO’s witnesses appear to be

11

located outside of Arizona, and beyond the subpoena power of this Court. While live

12

testimony is preferred whenever feasible, see Hess v. Gray, 85 F.R.D. 15, 25 (N.D. Ill.

13
1979), the Court's lack of subpoena power may be solved through the use of deposition
14
15

testimony or video conference. Additionally, Defendant CREDO could require their

16

employees to travel to Arizona for trial. See Berry v. Potter, No. CIV 04–2922-PHX-

17

RCB, 2006 WL 335841, at *5 (D. Ariz. Feb. 10, 2006) (discounting inconvenience to a

18

party’s employees who could be compelled to testify as witnesses); FUL Inc. v. Unified

19
20

Sch. Dist. No. 204, 839 F. Supp. 1307, 1311 (N.D. Ill. 1993) (“[I]t is generally assumed

21

that witnesses within the control of the party calling them, such as employees, will appear

22

voluntarily[.]”) Were venue to be transferred to North Dakota, Mr. Winjum would have

23

no such power to compel his witnesses to travel. Therefore, the availability of compulsory

24
25
26

process and the availability of live testimony at trial weigh slightly in against transfer.
///

7

1
2

4.

Forum Selection Clause and the Relative Financial Burden

CREDO argues that the real property in question is located in North Dakota, and

3
4

that the Contract in question dictates that “any disputes arising from such contract shall be

5

governed by and construed in accordance with North Dakota law.” (Doc. 18 at 5).

6

Hoffman v. Minuteman Press Int’l, Inc., consists of facts similar to the case at hand. 747

7

F. Supp. 552 (W.D. Mo. 1990). In Hoffman, “small, unsophisticated business people”

8
9

alleged that they “were fraudulently induced to enter into franchise agreements” which

10

contained forum selection and governing law clauses. Id. at 559. Noting the disparate

11

financial burden on the parties, the Hoffman court refused to transfer venue to the

12

defendant franchisor noting that “[t]hese plaintiffs deserve their day in court. If they

13
successfully prove their allegations of fraud, the forum selection clause is not worth the
14
15

paper on which it is written. To enforce such a clause on the front end in cases like this

16

one would be grossly unfair.” Id.

17
18

Similar allegations are at the heart of this case: an unsophisticated, indigent,
mentally ill person was allegedly induced to enter into a real estate contract he could not

19
20

understand, and would not have entered into had he not been mentally ill. Thus framed,

21

key portions of the merits of this case will revolve around the question of whether Mr.

22

Kemp knew, or should have known, at the time of the signing of the contract of Mr.

23

Winjum’s mental illness. (Doc. 20 at 6). While contractual terms are presumptively

24
25
26

enforced, “if the inclusion of the clause was the product of fraud or overreaching,” or
“would effectively … deprive” Plaintiff “of his day in court,” enforcement of the clause is

8

1

unreasonable. Murphy v. Schneider Nat'l, Inc., 362 F.3d 1133, 1140 (9th Cir. 2004) (citing

2

M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 12, (1972))

3
Beyond the question of overreaching, and unequal bargaining position, at the time

4
5

the Contract was negotiated and executed, Mr. Winjum may not get his day in court if

6

venue is transferred to North Dakota. Mr. Winjum’s “extraordinarily limited financial

7

resources” and “income consist[ing] of very minimal federal benefits” very clearly weigh

8
9

against selection of North Dakota as the venue for this action. (Doc. 20 at 14). While the

10

cost for Mr. Winjum of litigating in North Dakota may mean that he is unable to proceed

11

with his case, (Id. at 15 n.8), the same is presumably not true for an oil exploration

12

company. The costs of sending its agent into the forum state repeatedly to secure the

13
disputed Contract does not appear to have been overly inconvenient for CREDO; nor then
14
15

should the costs of travel to defend the same Contract in the same forum state be overly

16

inconvenient.

17
18

Transfer of venue “is not appropriate . . . when the transfer merely shifts the
inconvenience from one party to another.” Impra, Inc. v. Quinton Instruments Co., CIV-

19
20

90-0383 PHX WPC, 1990 WL 284713 at *2 (D. Ariz. June 26, 1990); see also Decker

21

Coal, 805 F.2d at 843 (holding that district court did not abuse its discretion in denying

22

motion to transfer in part because “[t]he transfer would merely shift rather than eliminate

23

the inconvenience”). It is particularly inappropriate when, as here, the burden of such a

24
25
26

transfer would not be equally distributed.
///

9

1

B.

2

The interests of justice also weigh against venue transfer. While Defendant urges

Interests of Justice

3
4

that North Dakota has an interest in resolving disputes involving property within its

5

borders, Arizona has an interest in “ensuring that its residents are compensated for their

6

injuries.” Magedson v. Whitney Information Network, Inc., 2009 WL 113477 (D. Ariz.

7

2009). Arizona particularly has an interest in protecting its citizens who may be impaired

8
9

or vulnerable. See, e.g., A.R.S. §46-456 (duties to vulnerable adult). The North Dakota

10

property would not have transferred had it not been for the Contract, which was

11

negotiated and executed in Arizona by an Arizona resident.

12

Defendant has not met its burden of proving that the relevant factors, as a whole,

13
constitute “a strong showing of inconvenience to warrant upsetting [Plaintiff’s] choice of
14
15

forum.” Decker Coal, 805 F.2d at 843. Given that the relevant factors all support litigating

16

this case in Arizona, this case will continue in the District of Arizona.

17
CONCLUSION

18
19

In summary, the appropriate factors weigh against transfer. Many of the factors

20

carry little or no weight, either because they do not apply to the circumstances of this case

21

or because they are relatively neutral with respect to both parties. However, the critical

22
23

factors involving the plaintiff’s choice of venue, convenience of parties and witnesses,

24

availability of compulsory process and the relative financial burden weigh in favor denial

25

of Defendant’s motion to transfer.

26

10

1
2

IT IS THEREFORE ORDERED that Defendant’s Motion for Transfer of Venue
(Doc. 18) is DENIED.

3
4

IT IS FURTHER ORDERED that Plaintiff’s motions for venue discovery, (Doc.

5

21), and for surreply (Doc. 24), as well as Defendant’s motion to strike (Doc. 27) are

6

DENIED AS MOOT.

7

Dated this 9th day of August, 2012.

8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26

11