Laferney v. The Citizens Bank of East Tennessee et al

Filing 50

ORDER transferring case to the Eastern District of Tennessee; the portions of Defendants' pending motion challenging personal jurisdiction are herby DENIED as moot, the remaining portions of Defendants' pending motion to dismiss are to be TRANSFERRED with this action. Signed by Chief Judge Lisa G. Wood on 9/30/2011.(csr)

3n the aniteb Atatto flttrtct Court
for the Aoutbern Marta of dtorgta
runuttk Vibioton

RANDI LAFERNEY
Plaintiff,
vs.
THE CITIZENS BANK OF EAST
TENNESSEE, TERRY MORELOCK,
and WILLIAM E. PHILLIPS,
Defendants.

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CV 210-169

ORDER

Presently before the Court is Defendants' Motion to
Dismiss. See Dkt. No. 13. For the reasons stated below, the
Court orders the action transferred to the Eastern District of
Tennessee pursuant to 28 U.S.C. § 1406(a).

BACKGROUND
Randi LaFerney ("Plaintiff") was a managing member of Maahr
Forest, LLC, ("Maahr Forest") a corporation formed to develop a
parcel of land in Tennessee into a residential subdivision known
as Wildwood at Hughes Farm. See Dkt. No. 1, at 4-5. Maahr Forest
originally financed the project with a loan from Washington

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County Bank. In May of 2009, Plaintiff, on behalf of Maahr
Forest, refinanced the original loan with a loan from Defendant
Citizens Bank. In conjunction with the Citizens Bank loan,
Plaintiff signed a personal guaranty. The present dispute
concerns the personal guaranty and subsequent actions by
Defendants related to the loan.
Plaintiff claims Defendants (Citizens Bank and its agents,
Terry Morelock and William Phillips) engaged in a conspiracy to
fraudulently induce Plaintiff into refinancing her original loan
and signing a personal guaranty. Id. Plaintiff alleges that
Defendants falsely reported to multiple credit reporting
agencies that Plaintiff was personally in arrears on the loan.
Plaintiff complains that this false reporting prevented her from
securing additional financing for the development project. Id.
at 20. Plaintiff also asserts Defendants have taken steps to
improperly foreclose on the property. Id. at 7.
Plaintiff relies on multiple theories for recovery: breach
of contract; misrepresentation and fraud; violations of federal
and state RICO statutes; violations of the Georgia Fair Business
Practices Act; negligence; violations of the Georgia Uniform
Securities Act; and defamation of credit in violation of federal
and state Fair Credit Reporting laws. Id. at 15-21. Defendants
moved to dismiss Plaintiff's suit based on lack of personal
jurisdiction, improper venue, failure to properly plead a RICO

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violation, failure to state a claim under the Fair Credit
Reporting Act, and failure to state a claim for breach of
contract. See Dkt. No. 13.
The Court concluded that the Southern District of Georgia
is not the proper venue for this dispute. Dkt. No. 47, at 6. The
Court ordered the parties to file additional briefs addressing
the singular issue of whether transfer or dismissal of the
action is appropriate under 28 U.S.C. § 1406(a). Id. at 7.

LEGAL STANDARD
Where venue is improper, a court may either dismiss the
action or transfer the action to an appropriate venue. See 28
U.S.C. § 1406(a); Leach v. Peacock, 2011 WL 1130596, at *4 (M.D.
Ala. Mar. 25, 2011) . "The court may transfer the case if (1) the
proposed transferee court is one in which the action 'could have
been brought' and (2) transfer would be 'in the interest of
justice.'" Leach, 2011 WL 1130596, at *4 Trial courts generally
have broad discretion in evaluating venue arguments and
determining whether to transfer or dismiss a case. Id. (citing
England v. ITT Thompson Induss., Inc., 856 F.2d 1518, 1520 (11th
Cir. 1988)).

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DISCUSSION
The answer to the first inquiry under § 1406(a) - whether
the transferee court is one in which the action could have been
brought - is simple. This Court noted in its previous order that
the Defendants effectively concede that Plaintiff's action could
have been brought in the Eastern District of Tennessee. Dkt. No.
47, at 6-7. Moreover, all Defendants reside in the Eastern
District of Tennessee and essentially all conduct giving rise to
Plaintiff's claims occurred in that District. Dkt. No. 13, at
13-14. Plaintiff could have brought this action in the Eastern
District of Tennessee.
Defendants, however, argue this action is not in the
interest of justice and the action should be dismissed. Dkt. No.
48, at 1. To support their position, Defendants claim Plaintiff
was not diligent and "knowingly filed] in the wrong district."
Id. Defendants also contend that relatively little time has
elapsed since the Complaint was filed and that no discovery has
occurred. Finally, Defendants argue that none of Plaintiff's
claims would be barred by applicable statutes of limitation,
therefore Plaintiff can freely refile her Complaint if the
present action is dismissed. The Court finds Defendants'
arguments unpersuasive.
"[T]he interest of justice may require that the complaint
not be dismissed but rather that it be transferred in order that
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the plaintiff not be penalized by . . . time-consuming and
justice-defeating technicalities." Leach, 2011 WL 1130596, at *4
(citing Goldlawr, Inc. v. Heiman, 369 U.S. 463, 467 (1962))
(internal quotations and citation omitted). Furthermore, "[w]hen
venue would be proper in another district under § 1391, transfer
is preferred over dismissal unless there is evidence that a case
was brought in an improper venue in bad faith or in an effort to
harass a defendant." Palmer v. IJau, 2010 WL 2740075, at 2 (M.D.
Fla. Jul. 12, 2010) (citing Charles Alan Wright & Arthur Miller,
Federal Practice & Procedure § 3827 (2d ed. 1998 & 2005 Supp.)).
Defendants have not alleged that Plaintiff filed this suit
in the Southern District of Georgia in bad faith or to harass
the Detendants. Rather, Defendants merely highlight the lack of
legal basis for venue in this district. Dkt. No. 48, at 2. The
Court finds no evidence in the Plaintiff's Complaint, motions,
or arguments that indicate a bad faith motive. Plaintiff has
consistently maintained that this district is the proper venue
for this dispute. Plaintiff's arguments are based on
misunderstandings of venue provisions, and bringing suit in the
Southern District of Georgia does not appear intended to harass
Defendants. As such, transfer rather than dismissal of this
action is preferred. See e.g., Dau, 2010 WL 2740075, at *2
(holding that transferring rather than dismissing an action was

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appropriate where improper venue was due to a misunderstanding
of venue provisions, not bad faith)
Defendants further argue that because the action is in its
early stages transfer is not in the interest of justice. Dkt.
No. 48, at 4. This action was filed nearly a year ago, a
scheduling order has been entered, the parties have requested
(and challenged) an injunction and protective order, and have
begun compiling witnesses for trial. Dkt. Nos. 1, 21, 24, 28,
35, and 45. Although the action is far from resolution, it is
not so undeveloped to militate in favor of dismissal.
Defendants also argue that Plaintiff's action would not be
barred by statute of limitations and therefore transfer is not
in the interest of justice. Dkt. No. 48, at 3-4. It is true that
"[g]enerally, the court should transfer if dismissal would
result in a statute of limitations barring the plaintiff from
refiling her claim." Pritchett v. Paschall Truck Lines, Inc.,
714 F. Supp. 2d 1171, 1175 (N.D. Ala. 2010) (citing Goldlawr,
369 U.S. at 466-67). However, Defendants point to no authority,
and the Court is not aware of any, that states the counterproposition that the absence of a statutory bar supports
dismissal rather than transfer. As Defendants correctly point

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out "[statutes of limitations are] not a concern here.

"1

Dkt. No.

48, at 3.
Ultimately, the Court rejects Defendants' arguments in
favor of dismissal and finds that transfer to the Eastern
District of Tennessee is in the interest of justice for three
primary reasons. First, transfer will allow the Plaintiff to
avoid costs and difficulties associated with filing an identical
lawsuit in the proper district. See Leach, 2011 WL 1130596, at
*4 (noting the benefit of avoiding refilling for plaintiff who
mistakenly filed suit in the wrong district). Plaintiff has
filed an action, amended her Complaint, and complied with
relevant service requirements. Dismissal would require Plaintiff
to unnecessarily duplicate these actions. Second, transfer also
serves justice in that personal jurisdiction over Defendants in
the Eastern District of Tennessee is unambiguous. See id.
(observing that transfer serves justice where transferee court
would have "unambiguous personal jurisdiction"). Finally, the
Eastern District of Tennessee is no way inconvenient for
Plaintiff given that her residential property is located there,
and it is where Plaintiff executed all relevant loan documents.

The Court has no occasion to address the statutes of limitations applicable
to this action. Rather, the Court finds that it is in the interest of
justice to transfer the action, thus ensuring that Plaintiff's mistaken
venue will not lead to any possible statute of limitation concerns. See
e.g., Leach, 2011 WL 1130596, at *4 (noting "transfer would avoid any
statute-of-limitations concerns").
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II

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Plaintiff has also articulated concerns that she will not
receive fair adjudication of her claims in the Eastern District
of Tennessee. See Dkt. No. 49, at 8-9. Plaintiff has provided no
credible argument to suggest that the District Court for the
Eastern District of Tennessee will not fairly hear Plaintiff's
claims. Plaintiff's unsubstantiated concerns about the fairness
of the transferee district do not support an argument against
transfer. See e.g., Ramsey v. Fox News Network, LLC, 323 F.
Supp. 2d 1352 (N.D. Ga. 2004) (rejecting Plaintiff's concerns
about the fairness of the transferee district in deciding
whether to transfer a dispute under 28 U.S.C. § 1404(a) motion).
Pursuant to § 1391, venue is proper in the Eastern District
of Tennessee because all Defendants reside there and a
substantial part of the events giving rise to Plaintiff's claims
occurred there. The Court finds that transfer, not dismissal, of
the action is in the interest of justice. Accordingly, the case
will be transferred to the Eastern District of Tennessee.

CONCLUSION
For the reasons stated above, venue for this action is
improper in the Southern District of Georgia. The Court
TRANSFERS this action to the Eastern District of Tennessee,
pursuant to 28 U.S.C. § 1406(a) . The portions of Defendants'
pending motion challenging personal jurisdiction are hereby

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DENIED as moot; the remaining portions of Defendants' pending
motion to dismiss are to be TRANSFERRED with the action.

SO ORDERED, this 30th day of September, 2011.

LISA GODBEY OOD, CHIEF JUDGE
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF GEORGIA

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