Foster v. SLM Financial Corporation et al
Filing
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MEMORANDUM OPINION AND ORDER by Judge John G. Heyburn, II on 8/8/12 denying 5 Motion to Transfer Case cc:counsel (DAK)
UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF KENTUCKY
AT LOUISVILLE
CIVIL ACTION NO. 3:12-CV-00189-JGH
KEITH M. FOSTER
PLAINTIFF
V.
SLM FINANCIAL CORPORATION d/b/a
SALLIE MAE BANK UT, et al.
DEFENDANTS
MEMORANDUM OPINION AND ORDER
Plaintiff, Keith M. Foster, brought this action for declaratory judgment against
Defendants, SLM Financial Corporation d/b/a Sallie Mae Bank UT (“Sallie Mae”) and Galen
Health Institutes, Inc. d/b/a Galen College of Nursing (“Galen”). The matter is now before the
Court on Sallie Mae’s motion to transfer for the convenience of the parties and witnesses. After
a conference to discuss the issues and for the following reasons, the Court will deny the motion.
I.
On March 14, 2012, Plaintiff initiated this litigation in the Jefferson Circuit Court,
alleging that his signatures were forged as co-signor and guarantor of three student loans for his
stepmother, Shannon Foster. He seeks a declaratory judgment finding that he bears no
responsibility for those loans.
Prior to this lawsuit, on June 16, 2009, Donald Foster, Plaintiff’s father, and Shannon
Foster (“the Fosters”) filed a voluntary petition under Chapter 13 of the Bankruptcy Code. On
October 11, 2009, the Fosters confirmed a Chapter 13 rehabilitation plan, which stated that the
student loans at issue would be paid by Plaintiff outside of bankruptcy. The Fosters have not
received a discharge as their bankruptcy is still pending in the Bankruptcy Court for the Southern
District of Indiana.
On April 9, 2012, Defendants removed this case to federal court, and now Sallie Mae has
requested a transfer to the Southern District of Indiana for the convenience of the parties and
witnesses pursuant to 28 U.S.C. § 1404(a). Sallie Mae fears that the outcome of this case in
combination with the Fosters’ bankruptcy will leave it with no responsible party from which to
collect the student loans. The second defendant, Galen, has not opposed this motion to transfer.
II.
The Court “may transfer any civil action to any other district or division where it might
have been brought” if that transfer would further “the convenience of parties and witnesses” and
“the interest of justice.” 28 U.S.C. § 1404(a). Therefore, Sallie Mae’s motion necessitates a
two-part inquiry. Rutherford v. Goodyear Tire and Rubber Co., 943 F. Supp. 789, 791 (W.D.
Ky. 1996). First, the Court must determine whether the present action “might have been
brought” in the Southern District of Indiana. Id. Second, the Court must find that the change of
venue would facilitate the “convenience of parties and witnesses” and advance the “interest of
justice.” Id.
Sallie Mae argues that the Southern District of Indiana would provide a proper venue as
substantial events or omissions giving rise to the claim occurred there. See 28 U.S.C. §
1391(b)(2). Sallie Mae asserts that the alleged forgery of Plaintiff’s signatures took place in that
judicial district. Although Sallie Mae points to no evidence in support of that assertion, the
Court will assume that the first part of the inquiry is satisfied because the second part will
thoroughly dispose of the motion.
Under the second part of the inquiry, Sallie must demonstrate that the balance of
convenience weighs strongly in its favor before Plaintiff’s choice of forum will be disturbed.
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D.C. Micro Dev., Inc. v. Lange, 246 F. Supp. 2d 705, 713 (W.D. Ky. 2003). This burden
requires Sallie Mae to present strong evidence that the circumstances warrant a change of venue.
Rutherford, 943 F. Supp. at 791. The Court will look to the following factors in making its
decision:
(1) the convenience of witnesses; (2) the location of the relevant documents and
relative ease of access to sources of proof; (3) the convenience of the parties; (4)
the locus of the operative facts; (5) the availability of process to compel the
attendance of unwilling witnesses; (6) the relative means of the parties; (7) the
forum’s familiarity with the governing law; (8) the weight accorded plaintiff’s
choice of forum; and (9) trial efficiency and the interests of justice, based on the
totality of the circumstances.
Long John Silver’s, Inc. v. Nickleson, No. 3:11-CV-93-H, 2011 WL 5025347, at *4 (W.D. Ky.
Oct. 21, 2011); see also D.C. Micro, 246 F. Supp. 2d at 713.
Here, Sallie Mae argues that a failure on the part of this Court to transfer could result in
conflicting decisions regarding liability under the loans, leaving Sallie Mae with no way to
regain its money. For example, Plaintiff might absolve himself of any loan obligations by
proving forgery in this case, while Shannon Foster might be insulated from Sallie Mae’s
collection efforts by the bankruptcy discharge.
However, Sallie Mae’s concerns are not grounded in legal reality. Debts incurred from
student loans may only be discharged in bankruptcy if repayment “would impose an undue
hardship on the debtor and the debtor’s dependents.” 11 U.S.C. § 523(a)(8); In re Oyler, 397
F.3d 382, 385 (6th Cir. 2005). In fact, Sallie Mae’s counsel agreed that Shannon Foster’s
student loans could not be discharged under the “undue hardship” test during this case’s last
status conference. As a co-signor, Shannon Foster is individually obligated to repay the student
loans in their entirety. Should Plaintiff disprove his liability for the loan debt, Sallie Mae
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remains secure in its ability to collect from Shannon Foster. Thus, Sallie Mae’s collection
concerns do not affect the change of venue analysis.
Also, the burdens of travel and expense do not subvert the convenience of the parties and
witnesses as the current venue lies only six miles from Sallie Mae’s preferred venue in the
Southern District of Indiana. The relevant documents and sources of proof should be equally
accessible.
Finally, Sallie Mae raised a legitimate concern as to whether the Fosters would be
amenable to process in Kentucky. Even so, that lone factor in favor of transfer cannot outweigh
Plaintiff’s right to have his claims adjudicated in a valid forum of his choosing. Therefore, the
Court concludes that Sallie Mae has failed to demonstrate the superior convenience of the
Southern District of Indiana.
For the reasons stated in its Memorandum Opinion and being otherwise sufficiently
advised,
IT IS HEREBY ORDERED that Sallie Mae’s motion to transfer is DENIED.
Date: August 7, 2012
August 8, 2012
cc:
Counsel of Record
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