CS Capital Corp. v. Local Senior Services et al

Filing 64

ORDER Transferring Case to United States District Court for the Northern District of Georgia. ORDERED THAT Defendant ILD Telecommunication Inc.'s (ILD) Motion to Dismiss 36 is GRANTED IN PART and DENIED IN PART. FURTHER ORDERED that this matter is CLOSED, by Chief Judge Wiley Y. Daniel on 12/11/12.(sgrim)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Chief Judge Wiley Y. Daniel
Civil Action No. 11-cv-02357-WYD-MEH
CS CAPITAL CORP. d/b/a THE INVOICE BANKERS CORP.,
Plaintiff,
v.
LOCAL SENIOR SERVICES,
RANDY KALANI FAHILGA, and
ILD CORP. f/k/a ILD Telecommunications, Inc.,
Defendants.

ORDER TRANSFERRING CASE TO UNITED STATES
DISTRICT COURT FOR THE NORTHERN DISTRICT OF GEORGIA

THIS MATTER is before the Court on Defendant ILD Telecommunication Inc.’s
(“ILD”) Motion to Dismiss [DE-36] Plaintiff’s, CS Capital corp., d/b/a The Invoice
Bankers Corp. (“Plaintiff”), First Amended Complaint [DE-33]. ILD seeks to dismiss the
lawsuit for lack of personal jurisdiction and improper venue, or, in the alternative,
transfer this action to the Northern District of Georgia. Having reviewed the parties’
papers and the applicable law, the Court will grant the motion in part and transfer the
matter to the Northern District of Georgia.
I.

BACKGROUND
Invoice Bankers originally filed this case in Arapahoe County District Court on

March, 2011, against Defendants Local Senior Services (“LSS”) and Randy Fahilga.

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Invoice Bankers had entered into an agreement (Receivables Purchase Agreement or
“RPA”) with LSS to purchase certain accounts receivable from LSS. State Compl., ¶5
[DE-2]. Pursuant to paragraph 3 of the RPA, Plaintiff purchased accounts receivable
from LSS at a rate of 75% of the value owed to LSS. [DE 50-1 at 5]. The purchase
included accounts of ILD. Fahilga executed the RPA as president of LSS and also
executed a Guaranty in favor of Invoice Bankers for any payments LSS may owe to
Invoice Bankers. Id. at ¶7. The state court Complaint alleged that LSS and Fahilga
had breached their agreements because the accounts of ILD have not been paid in
accordance with the terms of the RPA. Id. at ¶¶14-17.
After LSS and Fahilga removed the case to this Court, Invoice Bankers amended
the complaint to add ILD as a Defendant. [DE-33]. Invoice Bankers alleged that LSS
and ILD entered into a Bill Forwarding and Collections Agreement (“BFCA”) on March 3,
2010. Id. at ¶21. After Invoice Bankers purchased the accounts receivable of LSS, LSS
sent an assignment letter to ILD reflecting that all future payments owed to LSS under
the BFCA to Invoice Bankers. Because ILD has not paid anything to date, Invoice
Bankers alleged that ILD has breached its obligations under the BFCA and the
assignment letter. Id. at ¶27.
On May 25, 2012, Invoice Bankers filed a motion for default judgment against
LSS and Fahilga. Magistrate Judge Michael E. Hegarty submitted a recommendation
that I grant in part that motion [DE-59], which I affirmed and adopted on December11,
2012 [DE-63]. Accordingly, only the claims against ILD remain pending before me.
In the instant motion, ILD seeks to dismiss the First Amended Complaint for lack
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of personal jurisdiction (Rule 12(b)(2)) and improper venue (Rule 12(b)(3)). ILD argues
that it has no connection whatsoever to Colorado such that having to defend a lawsuit
here would offend traditional notions of fair play and substantial justice. ILD also seeks
dismissal for improper venue pursuant to Rule 12(b)(3). ILD maintains that its contract
with LSS that gives rise to Invoice Bankers’ claims contains a mandatory forum
selection clause, which requires all actions to be litigated in the Northern District of
Georgia. In the alternative, ILD seeks to transfer the action pursuant to 28 U.S.C. §
1404(a) pursuant to the same mandatory venue clause.
Because I believe that this matter should be transferred pursuant to the Northern
District of Georgia, I will not address the remaining arguments advanced in the motion
to dismiss.
II.

LEGAL STANDARD
28 U.S.C. 1404(a) 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 or to any district or division to which all
parties have consented.

The party moving to transfer a case under § 1404(a) carries the burden of showing that
the existing forum is inconvenient. Chrysler Credit Corp. v. Country Chrysler, Inc., 928
F.2d 1509, 1515 (10th Cir. 1991). “A motion to transfer under § 1404(a) thus calls on
the district court to weigh in the balance a number of case-specific factors.” Stewart

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Org., Inc. v. Ricoh Corp., 487 U.S. 22, 29 (1988).1 The presence of a forum-selection
clause is a “significant factor” in the § 1404(a) analysis; however, it “should receive
neither dispositive consideration ... nor no consideration.” Stewart Org., Inc., 487 U.S.
at 29, 32. Mandatory forum-selection clauses, however, are given great weight in §
1404(a) analyses. See REO Sales, Inc. v. Prudential Ins. Co. of Am., 925 F.Supp.
1491, 1493 (D.Colo. 1996) (discussing how forum-selection clauses “will often carry the
day when making a section 1404(a) determination.”).
LEGAL ANALYSIS

III.

ILD argues that the mandatory forum selection clause in its contract with LSS
requires all disputes to be litigated in Georgia under Georgia law. Def.’s Mot., Ex. 1 [DE
36-1, pp. 10, 14 of 19]. ILD also argues that defending a lawsuit in Colorado would be
inconvenient as “neither it, nor of its employees, work, reside or have a presence in
Colorado.” Id. at p. 11. In response, Invoice Bankers argues that its claim against ILD
does not “stem” from the BFCA because it is not a party to that agreement. Rather,
Invoice Bankers maintains that its claim against ILD is based on the assignment letter,
which contains no forum selection clause.
Invoice Bankers’ response is both factually and legally incorrect. As a factual
matter, the BFCA is the basis for the breach of contract claim in the first Amended

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Among the factors to be considered are 1) the plaintiff's choice of forum; 2) the accessibility of
witnesses and other sources of proof, including the availability of compulsory process to insure attendance
of witnesses; 3) the cost of making the necessary proof; 4) questions as to the enforceability of a judgment
if one is obtained; 5) relative advantages and obstacles to a fair trial; 6) difficulties that may arise from
congested dockets; 7) the possibility of the existence of questions arising in the area of conflict of laws; 8)
the advantage of having a local court determine questions of local law; and, 9) all other considerations of a
practical nature that make a trial easy, expeditious and economical. Chrysler Credit Corp., 928 F.2d at
1516.

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Complaint. Paragraph 27 of that pleading provides as follows:
ILD has not paid plaintiff Invoice Bankers anything to date, breaching its
obligations under the Bill Forwarding and Collections Agreement and
Exhibit 6 [assignment letter].
Am. Compl., ¶27. Thus, Invoice Banker’s claim against ILD is based on the BFCA,
which contains the venue clause. The argument is also legally incorrect because
Invoice Bankers is clearly a party to the BFCA by virtue of the purchase and assignment
by Invoice Bankers of the ILD accounts. By its express terms, the BFCA could only be
assigned if LSS first obtained ILD’s written consent. See BFCA, Art. 15 [DE 36-1, p. 9
of 19]. The so-called “assignment letter” is not a separate agreement between ILD and
LSS, much less Invoice Bankers and ILD, but a letter from LSS seeking ILD’s written
permission assign LSS’s interest under the BFCA to Invoice Bankers. To suggest that
this lawsuit is based solely on the “assignment letter” to avoid the impact of a mandatory
venue clause is as incorrect as it is absurd.
Invoice Bankers remaining arguments against transfer mostly involve Defendants
Fahilga and LSS, who are no longer in this case as a result of the default judgment.
See Pl.’s Resp., pp. 13-14. The other factors, convenience of the witnesses and
parties, cost of making the necessary proof and having the local court determine local
issues, etc., all either favor transfer or are a wash. Chrysler Credit Corp., 928 F.2d at
1516. Because I must afford the mandatory venue clause “substantial weight” in this
analysis, I exercise my discretion under 28 U.S.C. 1404(a) and transfer this matter to
the United States District Court for the Northern District of Georgia. See REO Sales,
925 F.Supp. at 1493.
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IV.

CONCLUSION
Based on the forgoing, it is
ORDERED THAT Defendant ILD Telecommunication Inc.’s (“ILD”) Motion to

Dismiss [DE-36] is GRANTED IN PART and DENIED IN PART. The Motion is
GRANTED to the extent that this matter is hereby transferred pursuant to 28 U.S.C.
1404(a) to the United States District Court for the Northern District of Georgia. The
motion is otherwise DENIED. It is
FURTHER ORDERED that this matter is CLOSED.
Dated: December 11, 2012.
BY THE COURT:

s/ Wiley Y. Daniel
WILEY Y. DANIEL,
CHIEF UNITED STATES DISTRICT JUDGE

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