Stafford v. Stanton et al

Filing 62

MEMORANDUM RULING re 30 MOTION to Dismiss Walter J. Stanton, III filed by Walter J Stanton, III. Signed by Chief Judge S Maurice Hicks, Jr on 11/9/2018. (crt,McDonnell, D)

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF LOUISIANA
SHREVEPORT DIVISION
RAYMOND STAFFORD

CIVIL ACTION NO. 17-0262

VERSUS

JUDGE S. MAURICE HICKS, JR.

WALTER J. STANTON, III,
DAVID DEBERARDINIS, AND
FINANCIAL RESOURCES, LLC

MAGISTRATE JUDGE HORNSBY

MEMORANDUM RULING
Before the Court is a Rule 12(b)(3) Motion to Dismiss for Improper Venue
(Record Document 30) filed by Defendant, Walter J. Stanton, III (“Stanton”).

Plaintiff,

Raymond Stafford (“Stafford”), opposes the motion. See Record Document 37. For the
reasons assigned herein, Stanton’s motion is hereby DENIED.
BACKGROUND FACTS
The litigation herein stems from an investment opportunity turned sour. Stafford,
a resident of Dublin, Ireland, was formerly friends with Stanton, a resident of Coral
Gables, Florida. See Record Document 12 at ¶¶ 1, 2, and 11. Stafford alleges that for
many years, and at times relevant to the claims herein, Stanton provided legal
assistance to Defendant David deBerardinis (“deBerardinis”), a resident of Shreveport,
Louisiana, and deBerardinis’ company, Defendant Financial Resources, LLC (“FR”), a
Louisiana limited liability company with its principal place of business in Shreveport,
Louisiana. See id. at ¶¶ 5, 9. Stanton allegedly provided legal services to deBerardinis,
FR, and FR’s related business entities regarding fuel purchase contracts. See id. at ¶
10. During the time period relevant to the litigation, it is also alleged that Stanton held
an officers’ position in a FR related entity. See id. at ¶ 9.

Page 1 of 14

Stafford contends that on or about February 16, 2016, Stanton contacted him to
discuss an opportunity to make an investment that would yield a large return in a short
period of time. See id. at ¶ 13.

Stanton allegedly advised Stafford that FR had an

opportunity to earn significant revenue by facilitating the sale of fuel from Alon USA to
Freeport McMoRan, both large publicly traded companies. See id. Stanton allegedly
proposed that Stafford make a “bridge loan” of up to $8,000,000.00 to FR with terms
that would provide Stafford with a repayment of his initial investment plus 10% profit
within 60 days.

See id. at ¶ 17.

Stafford alleges that Stanton assured him that

deBerardinis and FR’s financials were in excellent shape, and the investment involved
virtually no risk. See id. at ¶ 13. Stafford asserts that Stanton, in an effort to encourage
his investment, provided him with a brochure demonstrating the strong financial
condition of both deBerardinis and FR. See id. at ¶ 15. Stafford contends that the
brochure also listed Stanton as a corporate officer in one of deBerardinis’ fuel trading
entities. See id. at ¶ 15.
Stafford claims that Stanton advised him that repayment of the loan would be
made from an Alon USA account that held substantial funds for FR, which was
designated as the “Alon FR Master Trading Account.” See id. at ¶ 16. Stafford also
contends that Stanton advised him that FR would provide a personal guaranty of the
investment from deBerardinis, and Alon USA would provide a corporate guaranty. See
id. Stafford alleges that he decided to invest $2,500,000.00 in FR based upon the
urging and representations of Stanton, the financial documentation provided to him by
Stanton, and their fiduciary relationship. See id. at ¶ 19.

Page 2 of 14

Stanton allegedly drafted the legal documents necessary for Stafford’s
investment, including the promissory note with FR, which provided a repayment date of
May 16, 2016. See id. at ¶ 20. Stanton also allegedly drafted a letter agreement for
execution by Alon USA that confirmed the existence of the Alon FR Master Trading
account, and balance thereof, and contained a promise to timely remit repayment from
that account to Stafford. See id. at ¶ 18. Stanton also allegedly drafted deBerardinis’
personal guaranty, Alon USA’s corporate guaranty, and undertook the responsibility of
getting deBerardinis to obtain the necessary signatures on the Alon USA guaranty and
letter agreement. See id. at ¶ 20. Thereafter, Stanton allegedly forwarded the executed
copies of the documents to Stafford’s Louisiana counsel. See id. at ¶ 18 and 21.
On March 17, 2016, Stafford initiated a wire transfer of $2,500,000.00 into FR’s
account to complete the investment. See id. at ¶ 21. When the due date for repayment
of Stafford’s $2,500,000.00 investment and $250,000.00 profit arrived, no payment was
made. See id. at ¶ 22. Stanton allegedly advised Stafford that there would be a short
delay, but there was no cause for concern. See id.

Stafford asserts that despite

Stanton’s reassurances, no portion of the $2,750,000.00 owed to him has ever been
paid. See id. at ¶ 23.
Stafford claims that he made demands for payment upon deBerardinis, FR, and
Alon USA without success. See id. at ¶ 24. Alon USA allegedly responded to Stafford
by stating that the corporate guaranty purportedly executed by Alon USA was a forgery,
and Alon USA never agreed to guaranty payment of funds owed to him. See id. at ¶ 25.
Stafford alleges that pleadings filed in related litigation in Texas demonstrate that the
purported fuel trading agreements involving deBerardinis and his business entities were

Page 3 of 14

part of a scam, complete with fake Alon USA agreements, forged signatures, bogus
checks, and fabricated trading confirmations. See id. at ¶ 27.

1

Stafford considered Stanton to be his fiduciary regarding the investment
opportunity, and he trusted Stanton’s opinion based on their relationship and Stanton’s
intimate knowledge of deBerardinis and FR’s finances. See id. at ¶ 13. Stafford claims
that Stanton was aware that he was relying on his representations as a fiduciary in
deciding whether to make the investment. See id. at ¶ 14, 30. Stafford contends that if
Stanton had exercised reasonable due diligence he would have known the true financial
condition of deBerardinis and FR, the true status of the Alon FR Master Trading
Account, the inauthenticity of the Alon USA letter agreement and guaranty, and FR’s
inability to repay the loan. See id. at ¶ 28. Stafford claims that Stanton is liable to him
for negligent misrepresentation, arguing that Stanton was aware of his reliance on the
representations regarding the financial status of deBerardinis and FR, and therefore,
Stanton had a duty to supply him with correct information. See id. at ¶ 29.

Likewise,

Stafford asserts that Stanton’s lack of due diligence regarding the investment also
constitutes a breach of his fiduciary duty. See id. at ¶ 30. Stafford claims that but for
Stanton’s negligent misrepresentation and breach of fiduciary duty, he would never
have made the investment in FR, which caused him damage. See id. at ¶¶ 30-31.
Stafford also asserts direct claims against Stanton’s professional liability insurers,
National Union Fire Insurance Company (“National Union”) and Berkley Assurance

1

The Court notes that on March 29, 2018, deBerardinis was charged by superseding
indictment with mail fraud, bank fraud, wire fraud, money laundering, and making a false
statement to a bank in relation to various fuel sales agreements involving FR. See
United States v. deBerardinis, No. 18-0030, Western District of Louisiana, Record
Document 17.
Page 4 of 14

Company (“Berkley”) under Louisiana’s Direct Action Statute, La. Rev. Stat. 22:1269.
See id. at ¶¶ 4-5, 32. Stafford claims that based on the allegations above, Stanton,
National Union, Berkley, FR, and deBerardinis are each liable to him, in solido, for all
amounts owed under the promissory note. See id. at ¶ 33.
LAW AND ANALYSIS
Stanton moves the Court to dismiss Stafford’s claims against him pursuant to
Rule 12(b)(3), arguing that the Western District of Louisiana is an improper venue. See
Record Document 30. If a defendant objects to venue, the burden is on the plaintiff to
establish that venue is proper in the judicial district in which the case has been brought.
See Perez v. Pan Am Life Ins. Co., 70 F.3d 1268 at *2 (5th Cir. 1995). 2 As a general
rule, venue must be proper as to each cause of action and each defendant. See Ricks
v. Cadorath Aerospace Lafayette, LLC, No. 15-6686, 2017 WL 590293, at *9 (E.D. La.
Feb. 14, 2017) (citing Tucker v. United States Dep’t of Army, 42 F.3d 641, *2 (5th Cir.
1994)). When considering a Rule 12(b)(3) motion, the Court must accept all allegations
in the complaint as true and resolve all conflicts in favor of the plaintiff. See Braspetro
Oil Services Co. v. Modec (USA), Inc., 240 F. App’x 612, 615 (5th Cir. 2007). The Court
may “look at all evidence in the record beyond simply those facts alleged in the
complaint and its proper attachments.” Ambraco Inc. v. Bossclip B.V., 570 F.3d 233,
238 (5th Cir. 2009) (citation omitted). If the Court determines that venue is improper, it
“shall dismiss, or if it be in the interest of justice, transfer such case to any district . . . in
which it could have been brought.” 28 U.S.C. § 1406(a).
2

A defendant waives the right to contest improper venue if the defense is not included
in its first responsive pleading. See Fed. R. Civ. P. 12(h)(1)(B)(ii). National Union did not
contest venue in its answer. See Record Document 35. Berkley contests venue as to
Stanton, its insured. See Record Document 36 at 1-2.
Page 5 of 14

Venue is governed by 28 U.S.C. § 1391. Section 1391 provides: “[e]xcept as
otherwise provided for by law . . . this section shall govern the venue of all civil actions
brought in district courts of the United States.” 28 U.S.C. § 1391(a). Section 1391(b)
instructs that venue is appropriate in:
(1)

a judicial district in which any defendant resides, if all defendants
are residents of the State in which the district is located;

(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 subject of the action is situated; or

(3)

if there is no district in which an action may otherwise be brought as
provided in this section, any judicial district in which any defendant
is subject to the court’s personal jurisdiction with respect to such
action.

See 28 U.S.C. § 1391(b). If venue is challenged, the court must determine whether the
case falls within one of the three categories. See Trois v. Apple Tree Auction Center,
Inc., 882 F.3d 485, 493 (5th Cir. 2018). “If it does, venue is proper; if it does not, venue
is improper, and the case must be dismissed or transferred under section 1406(a).” Id.
(quoting Alt. Marine Const. Co. v. U.S. Dist. Court for the W. Dist. of Tex., 571 U.S. 49,
56, 134 S. Ct. 568, 577 (2013)). 3
In this instance, both parties agree venue is proper as to Stanton only if a
substantial part of the events or omissions giving rise to Stafford’s claims occurred
within the Western District of Louisiana. See Record Document 30-1 at 6; Record
Document 37 at 12.

Venue may be proper in more than one district, and the

“substantial part of the events or omissions test does not require the chosen venue to
3

“The first two paragraphs of §1391 define the preferred judicial districts for venue in a
typical case, but the third paragraph provides a fallback option.” Jolie Design & Décor,
Inc. v. BB Frosch, LLC, No. 17-5052, 2018 WL 537798, at *2 (E.D. La. Jan. 24, 2018)
(quoting Alt. Marine, 134 S. Ct. at 578).
Page 6 of 14

be the best venue…the selected district must simply have a substantial connection to
the claim.” Zurich American Ins. v. Tejas Concrete & Materials, Inc., 982 F.Supp.2d
714, 722 (W.D. Tex. 2013) (quoting VP, LLC v. Newmar Corp., No. 11-2813, 2012 WL
6201828, at *9 (E.D. La. Dec. 12, 2012)). “‘[S]ubstantiality’ for venue purposes is ‘more
of a qualitative than quantitative inquiry, determined by assessing the overall nature of
plaintiff’s claims and the nature of the specific events or omissions in the forum, and not
by simply adding up the number of contacts.” University Rehab. Hosp., Inc. v. Int’l Coop. Consultants, Inc., No. 05-1827, 2006 WL 1098905 (W.D. La. Apr. 24, 2006)
(quotation omitted). “Although the chosen venue does not have to be the place where
the most relevant events took place, the selected district’s contacts must be
substantial.” See McClintock v. School Board East Feliciana Parish, 299 F. App’x 363,
365 (5th Cir. 2008).
Stanton does not dispute that venue is proper as to deBerardinis and FR. See
Record Document 30-1 at 1, 6. However, Stanton contends that Stafford has failed to
allege any specific actions taken on his part within the Western District of Louisiana as
opposed to his office or home in Coral Gables, Florida. See id. at 2. Specifically,
Stanton argues that Stafford failed to allege that the financial brochure he provided
regarding the financial status of deBerardinis and FR was created in or shared from the
Western District of Louisiana. See id. at 3. Stanton also notes the lack of an allegation
that the bridge loan document or letter agreement between FR and Alon USA were
drafted in Louisiana. See id. Similarly, Stanton notes the lack of an allegation that the
drafts of the promissory note, personal guaranty of deBerardinis, and Alon USA
guaranty were prepared or sent from the Western District of Louisiana. See id. Stanton

Page 7 of 14

also notes that while there is an allegation that he forwarded the letter agreement to
Stafford’s Louisiana counsel, the attorney is question is located in Covington, Louisiana,
outside the boundaries of the Western District of Louisiana. See id. When FR failed to
pay on the promissory note, Stanton contends the communications between he and
Stafford regarding the delay in payment also occurred outside the boundaries of the
Western District of Louisiana. See id. at 4. Stanton also notes that he was not a party
to the promissory note or deBerardinis’ guaranty, both of which contain forum selection
clauses providing for venue within the Western District of Louisiana. See id. at 2;
Record Document 1, Exs. A and B.

Thus, Stanton argues that venue more properly

lies in the Southern District of Florida, or some other district outside of the Western
District of Louisiana. See Record Document 30-1 at 6.
Stafford’s opposition brief provides additional details for the court to consider.
First, Stafford reiterates the numerous ties between his investment and the Western
District of Louisiana as follows: (1) FR is located in Shreveport, (2) the investment was
personally guaranteed by deBerardinis, a Shreveport resident, (3) FR and deBerardinis
utilized Shreveport based legal counsel Jerald Harper (“Harper”) to complete the
transaction, (4) the promissory note and personal guaranty were executed by
deBerardinis in Shreveport, and (5) both the promissory note and the personal guaranty
contain venue clauses specifying exclusive venue within Caddo or Bossier parish, or the
Western District of Louisiana. See Record Document 37 at 4-6.
Stafford also attached an affidavit in which he states that prior to investing in FR
Stanton told him that for many years he had acted as legal counsel and business
promoter for FR and its related entities and deBerardinis. See Record Document 37-4

Page 8 of 14

at ¶ 5. Stafford also states that Stanton frequently traveled to Shreveport in conjunction
with his legal and promotional services. See id. Stafford also claims that Stanton told
him that his representation of deBerardinis and FR entities generated the majority of his
revenue. See id.

Attached to Stafford’s affidavit is a copy of an email from Stanton to

Harper and Calvin P. Brasseaux (“Brasseaux”) regarding the logistics for the execution
of the investment documents by Stafford, who was in Key Biscayne, Florida at the time.
See Record Document 37-4; Ex. IV-D. The email dated Wednesday, March 16, 2016,
contains the following statement: “Perhaps w [sic] we can get the address of Ray’s
[Stafford’s] residence and send the documents there and save a couple of days. I can
arrange to meet Ray tomorrow or Friday morning if I get the documents … will be
travelling Friday afternoon to Shreveport.” See id.
Stafford’s affidavit also attaches a copy of the financial brochure provided to him
by Stanton entitled “deBerardinis Affiliates – Fuel Purchasing Program,” which
describes the program in which Stafford invested. See Record Document 37-4, Ex. IVE. The brochure describes the various LLCs making up the Fuel Purchasing Program.
See id. 4 The brochure also lists the Fuel Purchasing Program’s management and
advisory team, which included deBerardinis, Neil Umhafer (“Umhafer”), and Todd
Muslow (“Muslow”) – all Shreveport residents. See id. The brochure also lists Stanton
as a member of the management and advisory team, noting his title as Secretary of FR

4

The deBerardinis Affiliates Fuel Purchase Program brochure describes the corporate
structure as consisting of FR LLC, FRIII Funding LLC, and FR IV Funding LLC
(“deBerardinis Affiliates”), which “were formed and have been separately funded to
perform under separate fuel purchase and sale contracts involving a major US Refiner
(“Supplier”), and several major public and private companies (“Purchasers”).” See
Record Document 37-4, Ex. IV-E.
Page 9 of 14

III ASC, LLC. See id. Stanton’s involvement with the management and advisory team
is described in the brochure as follows:
Law firms where Walt [Stanton] has been a partner have represented
deBerardinis in various transactions for more than 25 years. For the past
two years Walt [Stanton] has assisted several of the deBerardinis Affiliates
with respect to fuel purchase and sale contract matters, negotiations with
the Supplier, Purchaser(s), financial institutions, debt funds and related
financings.
See id.
Stafford also provided an affidavit from Brasseaux, an attorney whose office is in
Covington, Louisiana.

See Record Document 37-5. In his affidavit, Brasseaux states

that on March 2, 2016, Stanton contacted him and requested that he serve as Louisiana
counsel for Stafford with regard to the bridge loan to the deBerardinis Affiliates Fuel
Purchasing Program, and more specifically to FR. See id. at 1. Brasseaux states that
he was aware that Stanton provided legal representation to deBerardinis, FR, and the
Fuel Purchasing Program, but Stanton advised him that FR and deBerardinis would be
represented by Harper, a Shreveport based attorney, for this transaction. See id. at 2.
Brasseaux states that Stanton informed him that he would prepare the documents
related to the investment, and coordinate the execution of the necessary documents by
deBerardinis and Alon USA. See id. Brasseaux’s affidavit also confirms that Shreveport
residents Muslow and Umhafer were members of the Fuel Purchasing Program
management team, and were involved with the confection and execution of the
documents for Stafford’s investment, the funding thereof, and the failed attempts to
repay the amounts owed to Stafford upon the maturity date of the loan. See id. at 3.
Brasseaux also attached copies of emails to his affidavit between himself,
Stanton, Muslow, Harper, and deBerardinis, which provide additional details for the

Page 10 of 14

Court to consider. See Record Document 37-5, Exs. V-F, V-G, V-H, V-I, V-J, V-K, V-L.
By email dated March 3, 2016, Stanton forwarded to Brasseaux a draft of the
promissory note for the investment, copying Harper, Muslow, and Umhafer.

See

Record Document 37-5, Ex. V-F. By email dated March 4, 2016, Stanton confirmed
with Brasseaux that he would obtain the Alon USA guaranty. See Record Document
37-5, Ex. V-G. On March 9, 2016, Stanton sent an email to Muslow, Harper, and
Brasseaux that provided an outline of the necessary steps to complete the transaction.
See Record Document 37-5, Ex. V-H. Stanton’s email included instructions for Muslow
to send wire transfer information for FR’s bank account to Brasseaux and Harper. See
id. Within minutes, Muslow replied with wire instructions to Brasseaux, Harper, and
Stanton. See id. The wire instructions described FR’s bank account as being located at
Origin Bank, 1101 R.O.C. Ln., Ruston, LA 71270. See id. On March 10, 2016, Muslow
sent an email to Stanton, Harper, and deBerardinis offering to assist in getting
deBerardinis to execute the investment documents at the Shreveport office.
Record Document 37-5, Ex. V-I.

See

On March 16, 2016, Stanton sent an email to

Brasseaux and Harper forwarding Alon USA’s corporate guaranty.

See Record

Document 37-5, Ex. V-J, V-K. Also, on March 16, 2016, Muslow sent an email to
Stanton, Brasseaux, and Harper confirming that deBerardinis had executed the
investment documents. See Record Document 37-5, Ex. V-L. The same day, Stafford
wired his $2,500,000.00 investment to Brasseaux’s trust account, $2,490,000.00 of
which (less Brasseaux’s $10,000.00 fee) was then transferred to FR’s account at Origin
Bank in Ruston, Louisiana. See Record Document 37-5 at 4.

Page 11 of 14

Upon review of the record, the Court concludes that venue is proper within the
Western District of Louisiana. Pursuant to 28 U.S.C. § 1361(b)(2), venue in proper in “a
judicial district in which a substantial part of the events or omissions giving rise to the
claim occurred [].” (emphasis added). Stafford has alleged that Stanton is liable to him
for negligent misrepresentation and breach of fiduciary duty regarding the failed
investment. Stanton invites the Court to take a narrow view of venue, arguing that his
interactions with Stafford occurred outside of the Western District of Louisiana, such
that any misrepresentation or breach of duty also occurred outside of the district. The
Court does not view the venue statute so narrowly. To accept Stanton’s position, the
Court must ignore the entire sequence of events underlying and giving rise to Stafford’s
claims. The facts as detailed by Stafford, which this Court is obliged to accept as true
for its analysis, suggest that Stanton was at the helm of the failed investment by
soliciting Stafford as an investor and orchestrating the drafting and execution of the
necessary documents. Each step involved communications by Stanton to individuals
within the Western District of Louisiana. The Court also finds it significant that Stanton
directed the dissemination of wire instructions, which resulted in the transfer of
Stafford’s funds into FR’s account located at Origin Bank in Ruston, Louisiana, which
falls within the Western District of Louisiana. All of these actions are events giving rise
to Stafford’s claims for negligent misrepresentation and breach of fiduciary duty. But for
the failed investment and Stanton’s repeated interactions with other parties located
within the Western District of Louisiana for the completion thereof, Stafford would not
have a claim for negligent misrepresentation or breach of fiduciary duty.

See Mt.

Hawley Insurance Co. v. Baddley Chemical Co., Inc., No. 06-0565, 2006 WL 2022909,

Page 12 of 14

at *2 (W.D. Tex. June 17, 2006) (citing Uffner v. La Reunion Francaise, S.A., 244 F.3d
38, 42 (1st Cir. 2001) (the court should evaluate entire sequence of events underlying
claim, not just triggering event)). 5
Stafford is not a resident of the Western District of Louisiana.

See Record

Document 38 at 3. However, the plain language of the venue statute indicates that the
residence of the plaintiff is not relevant in determining whether venue is proper. See 28
U.S.C. § 1391. The focus is on the residence of the defendant. See id. Moreover, the
inquiry of the Court under Section 1391(b)(2) is only concerned with whether a
substantial part of the events or omissions giving rise to the claim occurred within the
proposed district. Clearly, a substantial number of events giving rise to Stafford’s claims
occurred in the Western District of Louisiana. While the Southern District of Florida may
also be an appropriate venue given Stanton’s residency in the district, it does not affect
the Court’s determination. Venue may be proper in more than one location, and the
Court is not required to determine the “best” venue, but rather whether the chosen
venue is proper. See Old Republic Ins. Co. v. Admiral Ins. Co., No. 15-3597, 2016 WL
10788990, at *3 (W.D. Tex. Aug. 8, 2016). For the reasons explained above, the Court
is assured that venue is proper within the Western District of Louisiana.
CONCLUSION
Based on the foregoing reasons, Stanton’s Rule 12(b)(3) motion to dismiss for
improper venue (Record Document 30) is hereby DENIED.

5

See also Gulf Ins. Co v. Glasbrenner, 417 F.3d 353, 356-57 (2d Cir. 2005); Mitrano v.
Hawes, 377 F.3d 402, 405 (4th Cir. 2004); First of Michigan Corp. v. Bramlet, 141 F.3d
260, 263-64 (6th Cir. 1998).

Page 13 of 14

THUS DONE AND SIGNED, in Shreveport, Louisiana, on this 9th day of
November, 2018.

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