WABASH VALLEY FEED AND GRAIN, LLC v. HUST et al
Filing
23
ORDER denying 17 Motion to Dismiss for Lack of Jurisdiction or to transfer venue to Western District of Kentucky. Signed by Judge Sarah Evans Barker on 9/6/2011. (SMD)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF INDIANA
EVANSVILLE DIVISION
WABASH VALLEY FEED AND GRAIN, )
)
LLC,
)
Plaintiff,
)
)
vs.
)
)
LAWRENCE HUST, d/b/a L. HUST
)
FARMS, L. HUST FARMS, and HUST
)
CATTLE COMPANY,
)
)
ALLAN HAVICK, d/b/a RAFTER H.
RANCH,
3:11-cv-00014-SEB-WGH
JOSH LANCASTER,
Defendants.
ORDER DENYING DEFENDANTS’ MOTION TO DISMISS AND DENYING
DEFENDANTS’ MOTION TO TRANSFER VENUE
This cause is before the Court on the Motion of Defendant, Lawrence Hust, d/b/a/
L. Hust Farms, L. Hust Farms, and Hust Cattle Company’s (“Hust Farms”), to Dismiss or,
in the Alternative, Motion to Transfer Venue (the “Motion”) [Docket No. 17], filed
March 17, 2011, pursuant to 28 U.S.C. § 1404(a).1 Hust Farms moves to dismiss this
action pursuant to Federal Rules of Civil Procedure 12(b)(2) and 12(b)(3). In the
alternative, Hust Farms alleges that venue is improper in the Southern District of Indiana
and requests that this Court transfer the action to the U.S. District Court for the Western
District of Kentucky for the convenience of the parties and witnesses, and in the interest
1
The Motion was filed solely by Defendant Hust Farms.
of justice. Plaintiff, Wabash Valley Feed and Grain, LLC (“Wabash Valley”), responds
that personal jurisdiction over Hust Farms may be exercised here and that venue is also
proper in the Southern District of Indiana. Further, Wabash Valley maintains that Hust
Farms has not met its burden to establish the need for transfer and that Indiana has a
strong interest in retaining jurisdiction over this action. For the reasons detailed in this
entry, we DENY Defendants’ Motion to Dismiss and DENY Defendants’ Motion to
Transfer Venue.
Factual Background
This case arises out of a contractual relationship between Wabash Valley and Hust
Farms. Wabash Valley is a limited liability company organized and existing under
Indiana law, with its principal place of business in Evansville, Indiana. Compl. ¶ 1. Hust
Farms, a private Kentucky business, is “a conglomerate of many farms located in
Webster, Henderson, Hopkins, and McLean Counties with a primary focus of growing
[c]orn, [s]oybeans, and [g]rain [s]orghum.”2 Defendant Lawrence Hust, who operates
Hust Farms, is a citizen of the Commonwealth of Kentucky. Id. ¶ 2. Defendant Josh
Lancaster (“Lancaster”), an agent of Hust Farms, is a resident of the Commonwealth of
Kentucky. Id. ¶¶ 48, 5. Defendant Allan Havick, d/b/a Rafter H. Ranch (“Havick”), is a
resident of the State of Iowa. Id. ¶ 4. Because this is a civil action between citizens of
different states with an amount in controversy above $75,000, subject matter jurisdiction
over the action is founded on diversity. 28 U.S.C. § 1391(a)(1).
2
L. HUST FARMS, http://hstrial-lhustfarms.homestead.com/ (last visited Aug. 10, 2011).
On February 4, 2010, Wabash Valley and Hust Farms entered into an agreement
wherein Wabash Valley agreed to purchase an entire herd of cattle from Hust Farms for a
sale price of $425,000. Compl. ¶ 9. Pursuant to this agreement, all cattle were to be
delivered in merchantable condition and free of communicable disease. Compl. Ex. A at
1. Any deformed or otherwise nonconforming cattle could be rejected at Wabash
Valley’s option, with the sale price adjusted accordingly. Id. By its terms, the agreement
included as part of the sale “the storage vessel and all frozen embryos [sic] and bull
semen contained within.” Id. at 11. The parties executed an addendum to the cattle
purchase agreement on March 1, 2010 to note, inter alia, that all cattle were located in
Slaughters, Kentucky3 and that the sale included hay and grain. Compl. ¶ 10; Compl. Ex.
B. at 1. Both the cattle purchase agreement and its addendum referenced an inventory list
setting forth the names and registration numbers of all cattle included in the sale. Compl.
¶ 16-17; Compl. Ex. F. at 1.
On February 4, 2010, the parties also entered into a farmland lease wherein
Wabash Valley agreed to lease certain land located in Webster County, Kentucky and
certain equipment and structures thereon from Hust Farms in monthly installments of
$5000. Compl. ¶ 11. The lease granted Wabash Valley exclusive use of “[a]ll buildings
and structures on the leased land,” except for one house trailer. Id.; Compl. Ex. C. at 1.
On March 18, 2010, the parties executed an addendum to the lease memorializing Hust
Farms’s intent to plant approximately 175 acres of row crops on the leased farmland.
3
Slaughters is a city within Webster County, Kentucky.
Compl. ¶ 12. The lease addendum also allocated crop inputs between the parties and
made Wabash Valley responsible for reestablishing pastures when any of these 175 acres
ceased to be used for production grain crops. Id.; Compl. Ex. D. at 1. That same month,
the parties verbally modified4 this addendum to reduce row crop acreage, alter crop input
allocation, abolish Wabash Valley’s duty to reestablish pastures, and adjust the rental rate
of the lease. Compl. ¶ 13. The parties modified the lease once more, on March 18, 2010,
by written addendum. Id. ¶ 14. Under the second lease addendum, Hust Farms agreed to
lend Wabash Valley “the use of all portable and stationary cattle working equipment” on
the leased farmland; in return, Wabash Valley permitted Hust Farms to store equipment in
buildings located on the leased farmland. Id.
Pursuant to the cattle purchase agreement and its associated inventory list, Wabash
Valley’s purchase was to include a mature herd sire identified as Hust Chief Sequoya
R366 (“Chief Sequoya”). Compl. ¶ 17; Compl. Ex. F at 12. Wabash Valley claims that
the agreement conferred upon it a 47% possessory interest in Chief Sequoya.5
Nevertheless, on February 23, 2010, Hust Farms sold Chief Sequoya to Havick in
Havick’s capacity as agent for Rafter H. Ranch. Compl. ¶ 18; Compl. Ex. G at 1. Havick
paid $4000 in exchange for full possession of Chief Sequoya and a 46% semen interest in
the sire. Compl. Ex. G at 1. Wabash Valley now alleges that this sale by Hust Farms was
4
In Count II of its Complaint, Wabash Valley takes issue with Hust Farms’s failure to
document the oral modifications in writing. Compl. ¶ 43.
5
We are unable to discern the origin of this number; there is no discussion of percent
possessory interests in the cattle purchase agreement or its addendum. However, Hust Farms
does not dispute this assertion. Thus, to the extent that this information is relevant, we accept it
as true.
a breach of the cattle purchase agreement. Compl. ¶ 19.
Another mature herd sire included in Wabash Valley’s purchase was Hust Hay
Day T509 (“Hay Day”).6 Compl. ¶ 21; Compl. Ex. F at 12. At some point before the
parties executed the cattle purchase agreement, Hay Day sustained an injury that rendered
him unable to sire calves except by synthetic means. Compl. ¶ 21. Wabash Valley was
not aware of Hay Day’s condition before the sale but soon realized it had acquired an
animal whose value was “markedly decreased because of his condition.” Id. ¶ 22.
Specifically, Wabash Valley incurred extra costs to artificially harvest this sire. Id. No
post-sale adjustment was made to Hay Day’s sale price. Id. According to Wabash
Valley, this situation represents a breach by Hust Farms of its duty to adjust sale price for
“[c]attle that are . . . crippled . . . or otherwise deformed.” Id. ¶ 23; Compl. Ex. A at 1.
Wabash Valley also states that Hust Farms breached its duties involving
registration of the cattle involved in the sale. Compl. ¶¶ 28-30. Notably, Wabash Valley
claims that Hust Farms failed to: (1) transfer registration of all cattle to Wabash Valley;
(2) update the breeding information of all cattle; and (3) register all cattle with the Red
Angus Association of America. Id. ¶ 29. In Wabash Valley’s view, these alleged failures
in effecting the transaction impaired its confidence in the lineage of the herd. Id. ¶ 30.
Wabash Valley also asserts several breaches by Hust Farms with respect to the
farmland lease. Despite the lease’s provision granting Wabash Valley exclusive use of all
buildings and structures on the farmland, Wabash Valley contends that Hust Farms rented
6
Although the inventory sheet lists this sire as “HUS” Hay Day T509, we leave it as
“Hust” for the purpose of consistency.
a farmhouse to tenants and prevented Wabash Valley from using pieces of cattle working
equipment. Id. ¶¶ 35-36, 40-41. Wabash Valley also alleges that Hust Farms allowed
persons other than Hust Farms employees to occupy the house trailer in contravention of
the lease. Id. ¶ 36; Compl. Ex. C at 1. Finally, Wabash Valley claims that Hust Farms
failed to provide weight tickets for certain harvested crops and never reduced Wabash
Valley’s monthly rent after the agreement to harvest row crops. Compl. ¶¶ 44-45.
On January 21, 2011, Wabash Valley filed its Original Complaint (“Complaint”)
against Hust Farms with this Court.7 Wabash Valley brings several causes of action
against Hust Farms: breach of the cattle purchase agreement and its addendum, breach of
the farmland lease and its addenda, fraud, conversion, and trespass.
Legal Analysis
Hust Farms’s Motion is twofold: first, it asks the Court to dismiss Wabash
Valley’s Complaint either for lack of personal jurisdiction under Rule 12(b)(2) of the
Federal Rules of Civil Procedure or for improper venue under Rule 12(b)(3). Second, in
the alternative, the Motion requests transfer of this action to the Western District of
Kentucky. We necessarily address our ability to exercise personal jurisdiction over Hust
Farms before considering whether it is appropriate for us to retain jurisdiction over the
action.
I. Motion to Dismiss for Lack of Personal Jurisdiction or Improper Venue
7
We note that in a judgment dated January 25, 2011, Hust Farms obtained a writ of
forcible detainer against Wabash Valley in the Webster District Court, Commonwealth of
Kentucky.
A. Personal Jurisdiction
1. Standard of Review
Federal Rule of Civil Procedure 12(b)(2) requires dismissal of a claim where
personal jurisdiction is found to be lacking. After the defendant moves to dismiss a claim
under Rule 12(b)(2), “the plaintiff bears the burden of demonstrating the existence of
jurisdiction.” Purdue Research Found. v. Sanofi-Synthelabo, S.A., 338 F.3d 773, 782 (7th
Cir. 2003). The plaintiff is required to “make out a prima facie case of personal
jurisdiction” and is entitled to have any conflicts in affidavits or supporting materials
resolved in its favor. Id. at 782-83 (citation omitted).
A district court must undertake and satisfy a two-step analysis in order to properly
exercise personal jurisdiction over a non-resident defendant. First, the exercise of
personal jurisdiction over the defendant must comport with the state’s long-arm statute;
second, such exercise must comport with the Due Process Clause of the Constitution. Id.
at 779. Because Indiana’s long-arm statute, Indiana Rule of Trial Procedure 4.4(a),
“reduce[s] analysis of personal jurisdiction to the issue of whether the exercise of
personal jurisdiction is consistent with the [f]ederal Due Process Clause,” we limit our
inquiry to the second step of the analysis. LinkAm. Corp. v. Albert, 857 N.E.2d 961, 967
(Ind. 2006). Due process requires that the defendant have “certain minimum contacts
with it such that the maintenance of the suit does not offend ‘traditional notions of fair
play and substantial justice.’” Mobile Anesthesiologists Chi., LLC v. Anesthesia Assocs. of
Hous. Metroplex, P.A., 623 F.3d 440, 443 (quoting Int’l Shoe Co. v. Washington, 326
U.S. 310, 316 (1945)). These minimum contacts “must have a basis in ‘some act by
which the defendant purposefully avails itself of the privilege of conducting activities
within the forum State, thus invoking the benefits and protections of its laws.’” Asahi
Metal Indus. Co. v. Super. Ct. of Cal., 480 U.S. 102, 109 (1987) (quoting Burger King
Corp. v. Rudzewicz, 471 U.S. 462, 475 (1985)). Such purposeful availment is required to
ensure that defendants may reasonably anticipate what conduct will subject them to the
jurisdiction of a foreign sovereign. Burger King, 471 U.S. at 472.
Personal jurisdiction may be either specific or general. A court may exercise
specific jurisdiction over a defendant if the case or controversy “arises out of” the
defendant’s contacts with the forum state, creating a “relationship among the defendant,
the forum, and the litigation.” Helicopteros Nacionales de Colom., S.A. v. Hall, 466 U.S.
408, 414 (1984) (citations omitted). By contrast, general jurisdiction is proper if the
defendant has “continuous and systematic” contacts with the forum state. Hyatt Int’l
Corp. v. Coco, 302 F.3d 707, 713 (7th Cir. 2002). Where such contacts exist, the court
has jurisdiction over the defendant regardless of the subject matter of the action. Id.
General jurisdiction employs a more stringent standard to ensure fundamental fairness.
Thus, the “continuous and systematic” contacts a defendant must have with a forum state
“must be so extensive to be tantamount to [the defendant] being constructively present in
the state” such that any litigation involving the defendant could justly be conducted in the
forum state. Purdue Research Found., 338 F.3d at 787.
2. Discussion
For this court to exercise personal jurisdiction over Hust Farms, Wabash Valley
must show that Hust Farms has sufficient minimum contacts with the State of Indiana for
either general or specific jurisdiction. Wabash Valley asserts that general jurisdiction
exists over Hust Farms based on the fact that Hust Farms “solicited Wabash Valley” for a
cattle herd sale for a period of five years. Pl.’s Br. at 8. During these five years,
according to Wabash Valley, Hust Farms made several telephone calls to Wabash Valley
members and traveled to Indiana to negotiate the sale. Id. Wabash Valley corroborates
this allegation by the affidavit of Lawrence Rasche (“Rasche”), one of its members. Pl.’s
Br. Ex. A at 1. Rasche’s affidavit sets forth no specific facts beyond indicating generally
that he: (1) “had a business relationship with [Hust Farms] for approximately five (5)
years”; (2) had been solicited by a certain Larry Peters (“Peters”) on Hust Farms’s behalf;
and (3) had experienced “several contacts [with Hust Farms]. . . in the State of Indiana
both by telephone and by in-person visits.” Id. at 2.
Several factors are typically weighed when determining whether a district court
may exercise general jurisdiction over a defendant, including the following:
(1) whether and to what extent the defendant conducts business in the forum state;
(2) whether the defendant maintains an office or employees within the forum state;
(3) whether the defendant sends agents into the forum state to conduct business;
(4) whether the defendant advertises or solicits business in the forum state; and
(5) whether the defendant has designated an agent for service of process in the
forum state.
McManaway v. KBR, Inc., 695 F. Supp. 2d 883, 894 (S.D. Ind. Feb. 25, 2010). Wabash
Valley contends that Hust Farms has satisfied this standard by “deliberately sending its
agent to Indiana in order to facilitate the sale of its herd of cattle to Wabash Valley.” Pl.’s
Br. at 8. Hust Farms counters that the Complaint does not establish that it has paid any
taxes, owned any property, conducted any business, or established any of its entities in
Indiana, making it improper for this Court to exercise general jurisdiction over Hust
Farms. Def.’s Br. at 8.
Our review of these factors as applied to the evidence of record leads us to
conclude that we lack general jurisdiction over Hust Farms. The limited information
given us regarding Hust Farms establishes that it is a modest row crop operation spanning
no more than three counties in Kentucky. No business entity records are available for any
of its alternative names in the Commonwealth of Kentucky or the State of Indiana, which
suggests that it is a sole proprietorship or partnership. Whatever the case may be, it is
clear that Hust Farms does not maintain employees in Indiana in any capacity. The
company website provides a post office box for prospective customers to contact Hust
Farms, as well as cellular telephone numbers and email addresses for Lancaster and
Lawrence Hust. This website also provides pictures of fewer than ten pieces of farm
equipment, without listed prices, that are for sale. In our view, such sparse facts as these
do not establish a continuous, systematic business presence in the State of Indiana. What
limited argument Wabash Valley advances to support general jurisdiction focuses upon
Hust Farms’s (or its agent’s) contacts with Indiana, and we are mindful of the Seventh
Circuit’s direction that general jurisdiction “is for suits neither arising out of nor related to
the defendant’s contacts.” RAR, Inc. v. Turner Diesel, Ltd., 107 F.3d 1272, 1277 (7th Cir.
1997); see also Wilson v. Humphreys (Cayman) Ltd., 916 F.2d 1239, 1244 (7th Cir. 1990)
(describing the general jurisdiction analysis as one of “the defendant’s overall activity in
the state, not simply its actions with respect to the underlying transaction”). We therefore
decline to exercise general jurisdiction over Hust Farms and move next to consider
whether specific personal jurisdiction can be properly exercised over this defendant.
Hust Farms looks mainly to Citadel Group Ltd. v. Washington Regional Medical
Center, 536 F.3d 757, 763 (7th Cir. 2008), to support its assertion that this court lacks
specific jurisdiction over its contractual arrangement with Wabash Valley. Def.’s Br. at
8. We have no disagreement with the Seventh Circuit’s stance in Citadel Group that “the
formation of the contract alone is not sufficient to confer personal jurisdiction.” Citadel
Grp., 536 F.3d at 763. However, “with respect to interstate contractual obligations . . .
parties who ‘reach out beyond one state and create continuing relationships and
obligations with citizens of another state’ are subject to regulation and sanctions in the
other [s]tate for the consequences of their activities.” Burger King, 471 U.S. at 473
(quoting Travelers Health Ass’n v. Virginia, 339 U.S. 643, 647 (1950)). More
importantly, we note that specific personal jurisdiction is to be analyzed on a factspecific, case-by-case basis. Am. Commercial Lines, LLC v. Ne. Maritime Inst., Inc., 58
F. Supp. 2d 935, 942 (S.D. Ind. 2008) (citing Brockman v. Kravic, 779 N.E.2d 1250, 1256
(Ind. Ct. App. 2002)). We examine several factors when determining the foreseeability to
the defendant of being haled into court in the Southern District of Indiana, including:
(1) [t]he nature and quality of the contacts with the forum state; (2) the quantity of
contacts [sic] with the state; (3) the relationship between those contacts and the
cause of action; (4) the interest of the forum state in providing a forum for its
residents; and (5) the convenience of the parties.
Harris v. Ford Motor Co., No. IP 85-1826-C, 1987 WL 54371, at *3 (S.D. Ind. May 1,
1987) (quoting Int’l Steel Co. v. Charter Builders, Inc., 585 F. Supp. 816, 821 (S.D. Ind.
1984)).
In considering the above factors, we note Hust Farms’s statement that “there is no
allegation of any conduct or connection with Indiana whereby [it] should have reasonably
anticipated being haled into court there.” Def.’s Br. at 9. This assertion directly follows
Hust Farms’s request that we discredit Wabash Valley’s allegation in its Complaint that
“soliciting and ultimately contracting with an Indiana limited liability company”
constituted purposeful availment of the privileges of conducting business in the State of
Indiana. Id.; Compl. ¶ 8. In fact, the parties present contradictory affidavits regarding
such alleged solicitation and contacts. Wabash Valley’s affidavit, mentioned above as the
statement of Rasche, accompanies Plaintiff’s Response Brief in Opposition to the Motion.
Pl.’s Br. Ex. A at 1. As previously described, this affidavit describes a five-year business
relationship between Hust Farms and Rasche, a member of Wabash Valley.8 Rasche
avers that during those five years, he was “solicited by Hust by and through his agents
and/or employees, namely Larry Peters” via telephone and visits that took place in
Spencer County, Indiana. Id. at 2.
Hust Farms’s affidavit is second in time; it accompanies the Reply Brief in Support
of the Motion. Reply Br. Ex. A at 1. This affidavit is the statement of Lawrence Hust,
who avers that “Hust Farms does not do business in Indiana.” Id. Mr. Hust admits that
Peters was a Hust Farms employee from approximately August 2008 to December 2009,
when he allegedly began working for Wabash Valley. Id. at 2-3. He claims no
8
Under the Indiana Business Flexibility Act, each member of an Indiana limited liability
company is an agent of the company and may conduct business in the company’s name unless
the operating agreement provides otherwise. IND. CODE § 23-18-3-1.1. Without viewing
Wabash Valley’s operating agreement, we assume that Rasche was authorized to conduct
business on behalf of the company.
knowledge of any contact between Peters and Rasche during Peters’s employment with
Hust Farms. Id. at 2. However, he states that Peters submitted no receipts for travel to
the State of Indiana or to visit Rasche. Id. It is Mr. Hust’s position that Rasche, not
anyone from Hust Farms, initiated all communications regarding the cattle purchase
agreement, which included telephone calls and “several in-person visits to . . . Webster
County, Kentucky.” Id. Additionally, Mr. Hust alleges that the cattle purchase
agreement, the farmland lease, and all addenda were executed in Kentucky. Id. at 2-3.
In resolving these contradictory affidavits, we note that when deciding a Rule
12(b)(2) motion to dismiss, “all well-pleaded jurisdictional allegations in the complaint
are accepted as true unless controverted by affidavit.” Travelers Cas. & Sur. Co. v.
Interclaim (Bermuda) Ltd., 304 F. Supp. 2d 1018, 1021 (N.D. Ill. 2004). The court
“reviews any affidavits and other documentary evidence that have been filed, as long as
factual disputes are resolved in favor of the non-movant”–in this case, Wabash Valley.
Noble Romans, Inc. v. French Baguette, LLC, 684 F. Supp. 2d 1065, 1069 (S.D. Ind.
2010). Wabash Valley “need only make out a prima facie case of personal jurisdiction.”
Purdue Research Found., 338 F.3d at 782 (citation omitted). The court does not act as a
factfinder when determining whether the plaintiff has met this standard; “rather, it accepts
properly supported proffers of evidence by a plaintiff as true and makes its ruling as a
matter of law.” Id. at 783 n.14 (quoting United States v. Swiss Am. Bank, 274 F.3d 610,
619 (1st Cir. 2001)).
Having reviewed the affidavits, and being mindful of the appropriate legal
standards, we are satisfied that specific personal jurisdiction over Hust Farms exists here.
We accept as true Wabash Valley’s evidence that Hust Farm employees, including Peters,
solicited one of its members for business purposes–notably, the cattle purchase
agreement. Importantly, we also accept as true that Peters made more than one business
visit to Rasche’s farm, which would necessarily have alerted Peters that he was
conducting business in the State of Indiana. By reaching out to Wabash Valley on the
phone and in person over the course of five years, Hust Farms forged a continuing
relationship with an Indiana entity. We find that such activity constitutes purposeful
availment of the laws and privileges of doing business in this state. The Supreme Court
has established that parties who reach beyond state lines in this manner “are subject to
regulation and sanctions in the other State for the consequences of their activities.”
Burger King, 471 U.S. at 472. A reasonable person in Mr. Hust’s position would be fully
aware that his actions here (and the actions of his agents and employees) would affect a
business situated in Indiana. Therefore, the Court concludes that Hust Farms should
reasonably have anticipated being haled into court in Indiana for lawsuits involving
Wabash Valley.
Because we conclude that Hust Farms has sufficient minimum contacts with
Indiana, we next consider whether Hust Farms has made a compelling case that litigating
this case in Indiana would violate traditional notions of fair play and substantial justice.
See Burger King, 471 U.S. at 576. Hust Farms has failed to submit evidence to establish
this point and opines merely that “Kentucky, and its courts, has a greater relationship to
this litigation.” Def.’s Br. at 13. We recognize that defending a lawsuit out of one’s
home state is always slightly burdensome, but we believe it is not oppressive in this case.
Even when parties do not enjoy the convenience of residing in adjoining states, as they do
here, “[e]asy air transportation, the rapid transmission of documents, and the abundance
of law firms with nationwide practices make it easy these days for cases to be litigated
with little extra burden.” Bd. of Trs., Sheet Metal Workers’ Nat’l Pension Fund v. Elite
Erectors, Inc., 212 F.3d 1031, 1037 (7th Cir. 2000).
Hust Farms will not be unduly burdened by defending this lawsuit in Indiana.
Moreover, as an Indiana limited liability company, Wabash Valley has an interest in
obtaining convenient relief in this state. See Burger King, 471 U.S. at 482-83. Due to
Hust Farms’s deliberate, ongoing contacts with this forum and the lack of prejudice to
Hust Farms in appearing here, we find that an exercise of personal jurisdiction over Hust
Farms in this action is entirely proper.
B. Venue
In addition to the Motion to Dismiss for lack of personal jurisdiction, Hust Farms
requests dismissal based on its claim of improper venue, pursuant to Federal Rule of Civil
Procedure 12(b)(3). Title 28, Section 1406(a) of the United States Code provides that
when a case is filed in an improper district, the district court shall dismiss or, if justice so
requires, transfer the case to a district where venue is proper. Venue in a diversity action
is proper only in –
(1) a judicial district where any defendant resides, if all defendants reside in the
same State, (2) 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, or (3) a judicial district in which any defendant
may be found, if there is no district in which the action may otherwise be brought.
28 U.S.C. § 1391(a). As the parties here reside in different states, § 1391(a)(1) is
inapplicable. Nevertheless, venue over Hust Farms is proper in Indiana under §
1391(a)(3) because, as discussed above, this Court has personal jurisdiction over Hust
Farms. Seventh Circuit law provides that a defendant “may be found” in a judicial
district if it has the type of “minimum contacts” with that district that permit the exercise
of personal jurisdiction under International Shoe Co. v. Washington, 326 U.S. 310 (1945).
Waeltz v. Delta Pilots Retirement Plan, 301 F.3d 804, 810 (7th Cir. 2002).
For the reasons stated above, we find that this court is empowered to exercise
personal jurisdiction over Hust Farms in this action. Accordingly, venue is proper in the
Southern District of Indiana, and Hust Farms’s Motion to Dismiss for lack of personal
jurisdiction or improper venue is DENIED.
II. Motion to Transfer Venue
Hust Farms’s final request is that Wabash Valley’s claims against it be transferred,
pursuant to 28 U.S.C. § 1404(a), given that Wabash Valley’s forum choice does not best
achieve the goal of convenience of the parties. Hust Farms argues that the proper place
for trial of all claims against it is in the Western District of Kentucky–the location of Hust
Farms, certain witnesses, and farm products involved in the transactions.
The federal venue statute is designed “to prevent the waste ‘of time, energy and
money’ and ‘to protect litigants, witnesses and the public against unnecessary
inconvenience and expense.’” Van Dusen v. Barrack, 376 U.S. 612, 616 (1964) (quoting
Cont’l Grain Co. v. Barge F.B.L.-585, 364 U.S. 19, 26, 27 (1960)); Heckler & Koch, Inc.
v. Precision Airsoft, LLC, No. 1:09-cv-485-SEB-JMS, 2010 WL 1257450, at *1 (S.D.
Ind. Mar. 25, 2010). Notably, § 1404(a) provides that, “for the convenience of parties
and witnesses and 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.” Transfer is appropriate
under this statute in cases where “the moving party establishes that (1) venue is proper in
the transferor district, (2) venue and jurisdiction are proper in the transferee district, and
(3) the transfer will serve the convenience of the parties, the convenience of the
witnesses, and the interest of justice.” State Farm Mut. Auto. Ins. Co. v. Estate of Bussell,
939 F. Supp. 646, 651 (S.D. Ind. 1996). A district court has discretion to adjudicate
motions for transfer of venue on a case-by-case basis. Stewart Org., Inc. v. Ricoh Corp.,
487 U.S. 22, 29 (1988).
Having determined that venue is proper for adjudication of this action in Indiana,
the issues before us are: (1) whether venue and jurisdiction are proper in Kentucky, and
(2) whether a transfer of venue would be convenient and in the interest of justice under §
1404(a). We may dispose of the first issue briefly. Venue is proper in Western Kentucky
under 28 U.S.C. § 1391(a)(2) because “a substantial part of the events or omissions
giving rise to the tort claim”–whether breach of contract or alleged tortious
conduct–occurred in this district. Further, Western Kentucky may exercise personal
jurisdiction over all defendants in this action. With respect to Lawrence Hust, Hust
Farms, and Lancaster, jurisdiction is proper in Kentucky because these defendants are
Kentucky residents. Havick, as stated above, is a resident of Iowa. However, we find
that in purchasing Chief Sequoya from Hust Farms, he purposefully availed himself of the
privileges of conducting business in Kentucky. Seeing no evidence that forcing him to
appear in Kentucky would offend traditional notions of fair play and substantial justice,
we find that Kentucky may exercise personal jurisdiction over Havick as well.
Next, we address whether a transfer of venue comports with the overarching policy
objectives of § 1404(a). Under the Seventh Circuit’s well-established guidelines
regarding transfer of venue, Hust Farms carries a weighty burden. It must prove that the
Western District of Kentucky is not just more convenient, but “clearly more convenient”
than the Southern District of Indiana. Coffey v. Van Dorn Iron Works, 796 F.2d 217, 220
(7th Cir. 1986) (emphasis added). As mentioned above, when making this determination,
we consider the convenience of the parties, the convenience of the witnesses, and the
interest of justice in light of all circumstances in the case. We conclude that the balance
of the relevant factors does not support transferring the case at bar to the Western District
of Kentucky.
A. Convenience of the Parties
We begin our analysis by acknowledging Wabash Valley’s choice to litigate its
claim in the Southern District of Indiana. Traditionally, district courts afford a plaintiff’s
choice of forum substantial deference. Butterick Co. v. Will, 316 F.2d 111, 112 (7th Cir.
1963); Hunter v. Big Rock Transp., Inc., No. 1:07-cv-1062-SEB-TAB, 2008 WL
1957775, at *2 (S.D. Ind. May 2, 2008). “[U]nless the balance is strongly in favor of the
defendant, the plaintiff’s choice of forum should rarely be disturbed.” In re Nat’l Presto
Indus., Inc., 347 F.3d 662, 664 (7th Cir. 2003) (quoting Gulf Oil Corp. v. Gilbert, 330
U.S. 501, 508 (1947)). The Seventh Circuit has stated that this factor has “minimal value
where none of the conduct . . . occurred in the forum selected by the plaintiff.” Chi., R.I.
& P.R. Co. v. Igoe, 220 F.2d 299, 304 (7th Cir. 1955) (citation omitted). This is not the
case in the present litigation, but we do not believe that Indiana is so intimately connected
to the action that this factor should control.
Wabash Valley does not overtly dispute Hust Farms’s assertion that Kentucky is
more convenient to the parties. However, it argues that this factor does not clearly weigh
in favor of transferring venue to Kentucky. Pl.’s Br. at 12. The Western District of
Kentucky is only marginally more convenient for Hust Farms than the Southern District
of Indiana would be. Courthouses for both districts are located approximately forty miles
from Hust Farms,9 and counsel for both parties are located in Evansville, Indiana.
Although we agree with Hust Farms that litigation in Kentucky would pose no major
hardship to Wabash Farms, we remind the litigants that “the effect of a transfer cannot be
a mere shift of inconveniences among parties.” Whitney v. Big Dog Holdings, Inc., No.
1:07-cv-1026-SEB-WTL, 2007 WL 3334503, at *3 (S.D. Ind. Nov. 7, 2007) (quoting
Moore v. AT&T Latin Am. Corp., 177 F. Supp. 2d 785, 879 (N.D. Ill. 2001)).
Transferring this case to the Western District of Kentucky would likely shift the
inconvenience, if any, from Hust Farms to Wabash Valley.10
Even though “[i]t is . . . not unusual that venue will be transferred to the district
where defendant has its principal office,” Whitney, 2007 WL 3334503, at *4, Hust Farms
does not make this point in its brief. Hust Farms does state that this case should be
9
This figure is accurate if we assume that litigation would take place in the Evansville
Division of the Southern District of Indiana.
10
Hust Farms correctly notes that Havick, the non-moving defendant, would not be any
more inconvenienced by litigating in Western Kentucky than in Southern Indiana because he
resides in Iowa. Thus, his location does not tip the balance in our analysis.
transferred because the contested issues will involve sources of proof located in
Kentucky, not Indiana, and thus, overall convenience would be served by a transfer of
venue. Hust Farms also claims that these disputed “actions and/or omissions” all arise out
of Kentucky–notably, the tort claims of trespass and conversion. Nevertheless, we cannot
determine with certainty every issue that will be contested at this stage in the litigation.
Furthermore, while it is true that the site of allegedly infringing activity should be
considered, it is not determinative as a matter of law. If it were, a defendant would
“almost always be allowed to transfer the case to its home forum.” Aearo Co. v. BacouDalloz USA Safety, Inc., No. 1:03-cv-01406-DFH-VS, 2004 WL 1629566, at * 2 (S.D.
Ind. July 21, 2004) (citation omitted).
Because Hust Farms has chosen to do business with entities in Southern Indiana,
we do not regard it as unfair to expect Hust Farms to respond to litigation in that district.
Taking all of these factors into consideration, the “convenience of the parties” factor is a
“wash” between the parties. It therefore lends no support for a transfer to the Western
District of Kentucky.
B. Convenience of the Witnesses
Convenience of witnesses is often deemed “the most important factor in the
transfer balance.” No Baloney Mktg., LLC v. Ryan, No. 1:09-cv-0200-SEB-TAB, 2010
WL 1286720, at *10 (S.D. Ind. Mar. 26, 2010) (citation omitted). For purposes of §
1404(a), this factor is primarily concerned with the availability of non-party witnesses
and evidence. Aearo Co., 2004 WL 1629566, at *2. Our aim in assessing this factor is
“to minimize the risk of ‘trial by deposition.’” Id. (quoting Volkswagen Aktiengesellschaft
v. Dee Eng’g, Inc., No. 1:02-cv-1669-LJM, 2003 WL 1089515, at *4 (S.D. Ind. Mar. 4,
2003)).
Here, Hust Farms offers a vague description of potential non-party witnesses in
support of the Motion. It identifies only “tenants” of the farmhouse and house trailer, as
well as individuals who may have purchased hay and farm equipment from Hust Farms.
Def.’s Br. at 12. Without more identifying information for these individuals, we assume
that they are closely affiliated with the side that will ask them to testify–Hust Farms.
“Courts ordinarily can assume that the parties will be sufficiently motivated to have their .
. . allies appear for trial wherever it might take place.” Aearo Co., 2004 WL 1629566, at
*3. Even if this assumption proves false, we cannot determine at this point whether their
locations favor one of the suggested venues over the other. We are not convinced that
Hust Farms has made a strong enough showing that convenience of its non-party
witnesses is truly served by a transfer to Kentucky.
Wabash Valley is likely to present its own party witnesses, such as Rasche, who
are Indiana residents. Although it argues that “there are party and non-party witnesses
alike that reside in Indiana and/or in other states,” it also fails to specify critical non-party
witnesses who may not be amenable to service in Indiana. Pl.’s Br. at 13. In short, the
availability of non-party witnesses is a neutral factor in this case that does not favor a
transfer of venue.
C. Interest of Justice
Finally, we consider whether a transfer of venue would be in the interest of justice.
This component of a § 1404(a) transfer analysis is often determinative, even if the
previously discussed factors might dictate a different result. Forecast Sales v. Axxiom
Mfg., Inc., No. 1:10-cv-01379-SEB-DML, 2011 WL 3206967, at *5 (S.D. Ind. July 28,
2011). This determination includes “such concerns as ensuring speedy trials, trying
related litigation together, and having a judge who is familiar with the applicable law try
the case.” Heller Fin., Inc. v. Midwhey Powder Co., 883 F.2d 1286, 1293 (7th Cir. 1989)
(citing Coffey, 796 F.2d at 221). As there is no “related litigation” in this case, we focus
on the relative speed with which each district resolves cases on its docket and the law
applicable to the parties’ claims.
Relevant to our analysis is a comparison of the dockets in this district and the
Western District of Kentucky. See Nat’l Presto, 347 F.3d at 664. For the twelve-month
period ending September 30, 2010, this district ranked 15th in the nation for the number of
weighted filings per authorized judgeship (26th in unweighted); Western Kentucky ranked
45th (41st in unweighted).11 For that same time period, the median time to trial in a civil
case in the Southern District of Indiana was 32.1 months; in the Western District of
Kentucky, it was 30.7 months. The median time from filing to disposition of a civil case
was 9.8 months in this district compared to 8.2 months in the Western District of
Kentucky.12 We find that these differences are not significant in terms of favoring one
forum over the other, especially since transferring the case is likely to cause additional
11
JAMES C. DUFF, JUDICIAL BUSINESS OF THE UNITED STATES COURTS: ANNUAL REPORT
OF THE DIRECTOR 409-12 TBL.X-1A (2010), available at
http://www.uscourts.gov/uscourts/Statistics/JudicialBusiness/2010/appendices/X1ASep10.pdf.
12
Federal Court Management Statistics, U.S. COURTS,
http://www.uscourts.gov/Statistics/FederalCourtManagementStatistics.aspx (last visited Aug. 30,
2011).
delay. Moreover, in light of the fact that neither of the parties mentioned these data in
their briefing, we are not persuaded that litigation of the action in Western Kentucky
would be more in the interest of justice.
Next, we consider the claims at issue and the applicable law involved. The
Supreme Court has stated that it is in the interest of justice “to protect plaintiffs against
the risk that transfer might be accompanied by a prejudicial change in applicable state
laws.” Van Dusen, 376 U.S. at 630. In this case, such a result is unlikely. Two of
Wabash Valley’s claims are for breach of contract, and the parties agree that there is
currently insufficient information to determine whether the substantive law of Indiana or
Kentucky will control. Contract law is not so complex or unsettled that any uncertainty
regarding its interpretation by this Court should be dispositive. See id. at 645; Amoco Oil
Co. v. Mobil Oil Corp., 90 F. Supp. 2d 958, 962 (N.D. Ill. 2000); Bodine’s, Inc. v. SunnyO, Inc., 494 F. Supp. 1279, 1286 (N.D. Ill. 1980). Similarly, although the tort claims will
be governed by Kentucky law,13 we are confident that Kentucky tort law is within our
comprehension. Indeed, given the close proximity between Indiana and Kentucky, this
court frequently is called upon to interpret and enforce Kentucky law.
Finally, we note that Hust Farms has failed to demonstrate that litigating this case
in Kentucky is any more desirable as a matter of public policy. We concede that it is for
them certainly more desirable to resolve a controversy with a “home court advantage,”
but we agree that Indiana has a correspondingly strong interest in protecting the welfare
13
Indiana courts apply the law of the state where the tort was committed. Simon v. United
States, 805 N.E.2d 798, 802 (Ind. 2004).
of its own limited liability companies. Lacking clear evidence that litigating in Indiana
“is a burden that ought not to be imposed upon the people of [the] community,” Hunter,
2008 WL 1957775, at *4 (quoting Chi., R.I., 220 F.2d at 304 n.4), we find that the interest
of justice does not weigh in favor of transferring this case to the Western District of
Kentucky for final resolution.
Conclusion
For the reasons detailed above, we find that this court is fully empowered to retain
jurisdiction over this action. Thus, Defendants’ Motion to Dismiss for Lack of Personal
Jurisdiction or for Improper Venue is DENIED. We also find that the statutory factors
governing transfer of venue do not support a transfer to the Western District of Kentucky.
Accordingly, Defendants’ Motion to Transfer Venue is also DENIED.
IT IS SO ORDERED.
Date:
09/06/2011
_______________________________
SARAH EVANS BARKER, JUDGE
United States District Court
Southern District of Indiana
Copies to:
Meagan D Rideout
RHINE ERNEST LLP
mrideout@rhine-ernest.com
Reed S. Schmitt
RHINE ERNEST, LLP
rschmitt@rhine-ernest.com
Patrick A. Shoulders
ZIEMER STAYMAN WEITZEL & SHOULDERS
pshoulders@zsws.com
Keith W. Vonderahe
ZIEMER STAYMAN WEITZEL & SHOULDERS
kvonderahe@zsws.com
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