Yancey v. International Fidelity Insurance Company et al

Filing 31

MEMORANDUM OPINION re: Motions to Dismiss and Motion to Transfer. Signed by District Judge James C. Cacheris on 05/25/16. (pmil, )

IN THE UNITED STATES DISTRICT COURT FOR THE
EASTERN DISTRICT OF VIRGINIA
Alexandria Division
RAYMOND A. YANCEY,

)
)
)
)
)
)
)
)
)
)

as Receiver,
v.
INTERNATIONAL FIDELITY
INSURANCE CO., ET AL.,
Defendants.

M E M O R A N D U M

Case No. 1:16-cv-0057

O P I N I O N

This matter is before the Court on Defendants
International Fidelity Insurance Company, Nationwide Electrical
Services, Inc., and John P. Young’s motion to dismiss the
complaint for lack of venue or, alternatively, to transfer to
the United States District Court for the District of Maryland.
[Dkt. 17.]

Also before the Court is Defendant R. Vaughn

Herbert’s motion to dismiss for lack of personal jurisdiction.
[Dkt. 11.]

For the following reasons, the Court will deny the

motions to dismiss and will grant the motion to transfer.
I.

Background

On September 9, 2014, this Court granted a consent
motion to appoint Raymond A. Yancey (“Yancey” or “Receiver”) as

1

Receiver for various Truland1 businesses that had filed for
Chapter 7 bankruptcy.

(See Receiver Order [Dkt. 1-2].)

This

Court’s Receiver Order tracked the language of a Bankruptcy
Court2 order lifting the bankruptcy stay to permit BMO Harris
Bank to enforce its lien on certain Truland property.
Lift Order [Dkt. 1-1].)

(See Stay

The Stay Lift Order applied broadly to

Truland’s accounts, chattel paper, instruments, documents,
general intangibles, inventory, equipment, fixtures, and
proceeds of the foregoing, among other categories of Truland
property.

(Stay Lift Order at 3-4.)

This Court appointed

Yancey as Receiver “to take change of all the property of
Truland described in the Stay Lift Order.”
¶ 1.)

(Receiver Order

Acting in that role, Yancey filed this lawsuit against

four Defendants who allegedly possess Truland property defined
in the Stay Lift and Receiver Orders.
Yancey alleges that Defendants owe payments to Truland
for subcontractor work Truland performed in Maryland.
Specifically, one Truland entity supplied labor and materials as

1

For purposes of this memorandum opinion, “Truland”
includes the Truland Group Inc.; Truland Systems Corp.; Pel-Bern
Electric Corp.; Blumenthal Kahn Truland Electric, LLC; Tech
Inc.; The Truland Group of Companies, Corp.; Snowden River
Corp.; Truland Service Corp.; Truland Walker Seal
Transportation, Inc.; and Northside Electric, LLC.
2
Truland’s bankruptcy is proceeding in the United
States Bankruptcy Court for the Eastern District of Virginia,
Alexandria Division.
2

an electrical subcontractor on a project at the University of
Maryland in College Park.

(Compl. ¶ 2.)

Another Truland entity

supplied labor and materials as an electrical subcontractor on
two highway travel-plaza projects in Aberdeen, Maryland.
(Compl. ¶¶ 3-4.)

Truland is allegedly owed over $10 million for

this work, approximately $8 million of which remains unpaid.
(Compl. ¶¶ 118, 127.)
The state of Maryland owns the projects3 and hired a
general contractor to oversee the construction.
51.)

(Compl. ¶¶ 20,

The general contractor hired a Maryland company named

Nationwide Electrical Services, Inc. (“Nationwide”) to perform
electrical subcontractor work.

(Compl. ¶¶ 22-23, 52-53.)

Defendant John P. Young is the President and CEO of Nationwide,
and Defendant R. Vaughn Herbert is a Vice President.
17-18.)

(Compl. ¶¶

Defendant International Fidelity Insurance Company

(“Fidelity”) issued surety bonds for these subcontracts naming
Nationwide as the principal and the general contractor as the
obligee.

(Compl. ¶¶ 15, 39-41, 77-79.)
Nationwide subcontracted some of its obligations on

the projects to Truland entities through a tiered subcontract.

3

The travel-plaza projects are owned by the State of
Maryland, Maryland Transportation Authority pursuant to a
public-private partnership with Areas USA, MDTP, LLC. (Compl.
¶ 51.)
3

(Compl. ¶¶ 23, 53.)

Yancey alleges that Truland performed its

contractual obligations in a timely, workmanlike, and acceptable
manner, and that Nationwide received payments from the general
contractor for Truland’s work.

(Compl. ¶¶ 25-29, 36, 55-61.)

Truland and Yancey made repeated demands to Nationwide and
Fidelity for payment, but approximately $8 million remains
unpaid on Truland’s subcontracts.

(Compl. ¶¶ 49, 83, 127.)

Yancey filed a five-count Complaint in this Court to
recover the amounts owed to Truland.

Counts I and II allege

that Fidelity breached its bond obligations by not paying
Truland for labor, materials, and services furnished.
Compl. ¶¶ 84-101.)

(See

Counts III and IV allege that Nationwide

breached its subcontracts with Truland by failing and refusing
to pay Truland the outstanding balance for work performed.
Compl. ¶¶ 102-113.)

(See

Count V alleges that Herbert and Young

retained payments intended for Truland in trust and are
personally liable for those payments pursuant to the Maryland
Construction Trust Fund Statute, Md. Code Ann., Real Prop. § 9201.

(See Compl. ¶¶ 114-127.)
On February 25, 2016, Defendant Herbert moved to

dismiss for lack of personal jurisdiction.
Supp. Dismiss [Dkt. 11-1].)

(Herbert’s Mem. in

The next day, Defendants Fidelity,

Nationwide, and Young moved to dismiss for improper venue or to
4

transfer venue to the U.S. District Court for the District of
Maryland.

(Mem. in Supp. Transfer [Dkt. 17-1].)

Those motions

have been fully briefed and argued at an oral hearing.

They are

now ripe for disposition.
II.

Standard of Review

Federal Rule of Civil Procedure 12(b)(2) permits
dismissal of an action when the court lacks personal
jurisdiction over the parties.

The plaintiff bears the burden

of demonstrating personal jurisdiction by a preponderance of the
evidence once its existence is questioned.
F.2d 673, 676 (4th Cir. 1989).

Combs v. Bakker, 886

When a district court resolves a

12(b)(2) motion without an evidentiary hearing, however, the
plaintiff need prove only a prima facie case of personal
jurisdiction.

Mylan Labs, Inc. v. Akzo, N.V., 2 F.3d 56, 60

(4th Cir. 1993); Combs, 886 F.2d at 676.

In deciding whether

the plaintiff has proved the prima facie case, the district
court must draw all reasonable inferences arising from the
proof, and resolve all factual disputes, in the plaintiff’s
favor.

Combs, 886 F.2d at 676; Wolf v. Richmond Cty. Hosp.

Auth., 745 F.2d 904, 908 (4th Cir. 1984).

If personal

jurisdiction is lacking, the court may dismiss or transfer the
case pursuant to 28 U.S.C. § 1406(a).

5

See Saudi v. Northrop

Grumman Corp., 427 F.3d 271, 277 (4th Cir. 2005); In re
Carefirst of Md., Inc., 305 F.3d 253, 256 (4th Cir. 2002).
Federal Rule of Civil Procedure 12(b)(3) permits a
defendant to challenge the plaintiff’s choice of venue.

The

plaintiff bears the burden of establishing that venue is proper.
T. & B. Equip. Co. v. RI, Inc., No. 3:15-cv-337, 2015 WL
5013875, at *2 (E.D. Va. Aug. 24, 2015).

“But if no evidentiary

hearing is held, ‘the plaintiff need only make a prima facie
showing of venue.’”

Id. (quoting Mitrano v. Hawes, 377 F.3d

402, 405 (4th Cir. 2004)).

“The court need not accept the

pleadings as true, but instead may consider outside evidence.
However, the Court must still draw all inferences in favor of
the plaintiff.”

Id. (citations omitted).

If venue is improper,

the court may dismiss the case or exercise its discretion to
transfer pursuant to 28 U.S.C. § 1406(a).

See Quinn v. Watson,

145 F. App’x 799, 800 (4th Cir. 2005).
Even if personal jurisdiction and venue are proper,
the court may transfer pursuant to 28 U.S.C. § 1404(a).

Brock

v. Entre Computer Ctrs., Inc., 933 F.2d 1253, 1257 (4th Cir.
1991).

Section 1404(a) permits a district court to transfer a

civil action “[f]or the convenience of parties and witnesses, in
the interest of justice.”

28 U.S.C. § 1404(a).

The moving

party bears the burden of demonstrating that transfer is proper.
6

Intranexus, Inc. v. Siemens Med. Solutions Health Servs. Corp.,
227 F. Supp. 2d 581, 583 (E.D. Va. 2002).

But when a valid

forum-selection clause applies, “the plaintiff bears the burden
of establishing that transfer to the forum for which the parties
bargained is unwarranted.”

Atl. Marine Const. Co. v. U.S. Dist.

Court for the W. Dist. of Tex., 134 S. Ct. 568, 577 (2013).
III.

Analysis

The Court will apply the above principles to
Defendants’ motions in the following order: (1) motion to
dismiss for lack of personal jurisdiction; (2) motion to dismiss
for improper venue; (3) motion to transfer for convenience and
in the interest of justice.

As described below, the Court

concludes that personal jurisdiction and venue are proper.
None-the-less, the Court will transfer this case to the U.S.
District Court for the District of Maryland pursuant to 28
U.S.C. § 1404(a).
A.

Personal Jurisdiction
This proceeding is ancillary to the Court’s order

appointing Yancey as a receiver.

Cf. Evans & Assocs., LLC v.

Holibaugh, 609 F.3d 359, 362-63 (4th Cir. 2010) (discussing
ancillary proceedings in receivership context generally).
Accordingly, the Court’s personal jurisdiction analysis turns on
an application of 28 U.S.C. §§ 754, 1692, and Federal Rule of
7

Civil Procedure 4(k)(1)(C).4

It is well recognized that these

statutes, working together, allow a court to exercise personal
jurisdiction over a defendant without considering the
defendants’ minimum contacts with the forum, when doing so
complies with due process.

See SEC v. Bilzerian, 378 F.3d 1100

(D.C. Cir. 2004); Am. Freedom Train Found. v. Spurney, 747 F.2d
1069 (1st Cir. 1984); Haile v. Henderson Nat’l Bank, 657 F.2d
816 (6th Cir. 1981); Carney v. Lopez, 933 F. Supp. 2d. 365, 375
(D. Conn. 2013); Hodgson v. Gilmartin, No. 06-1944, 2006 WL
2707397, at *7 (E.D. Pa. Sept. 18, 2006); Terry v. Modern Inv.
Co., No. 3-04cv00085, 2005 WL 1154274, at *1 (W.D. Va. May 11,
2005).

Establishing personal jurisdiction under these statutes

is a multi-step process.

First, a “receiver appointed in any

civil action or proceeding involving property, real, personal or
mixed, situated in different districts shall . . . be vested
with complete jurisdiction and control of all such property with
the right to take possession thereof” if the receiver files
copies of the complaint and order of appointment in the district
where the property is located within ten days of his
appointment.

4

28 U.S.C. § 754.

By making those timely filings,

The Receiver Order noted that Yancey’s receivership
“is subject to, and shall be administered according to Federal
Rule of Civil Procedure 66, 28 U.S.C. §§ 754, 959, and 1692.”
(Receiver Order at 4.)
8

the receiver acquires in rem jurisdiction over the receivership
property.

The receiver may then establish personal jurisdiction

over non-forum defendants in the receivership court pursuant to
Rule 4(k)(1)(C) because 28 U.S.C. § 1692 authorizes nationwide
service of process, provided the assertion of jurisdiction is
compatible with due process under the Fifth Amendment of the
United States Constitution.

See ESAB Grp., Inc. v. Centricut,

Inc., 126 F.3d 617, 626 (4th Cir. 1997); Terry, 2003 WL
21738299, at *4.
Parties do not dispute that Yancey complied with the
statutory requirements of sections 754 and 1692.

The Court

appointed Yancey as receiver on September 9, 2014, and Yancey
filed copies of the complaint and appointment order in the
District of Maryland within ten days, as required by section
754.

(See Mem. in Opp’n to Herbert Ex. A [Dkt. 19-1].)

Yancey

then affected service of process as to all Defendants and no
Defendant has argued that service was improper.
[Dkts. 4, 5, 6].)

(See Summonses

Thus, the statutory requirements for personal

jurisdiction in this Court are satisfied.
Despite the foregoing, the individual Defendants raise
two challenges to personal jurisdiction that the Court must
address.

First, Defendants Herbert and Young argue the claims

alleged against them are commercial torts, which are not
9

Yancey’s “property” within the meaning of the Stay Lift and
Receiver Orders.

Thus, they contend that Yancey may not rely on

the receivership statutes to assert personal jurisdiction over
them.5

Defendants’ argument is not persuasive.
The applicability of the receivership statutes turns

on whether Yancey alleges that Herbert and Young possess
receivership property.

Cf. U.S. SBA v. Cottonwood Advisors,

LLC, No. 3:12-cv-1222, 2012 WL 6044843, at *3 (N.D. Tex. Dec. 4,
2012) (considering whether defendant was holding receivership
property).

Yancey brought this lawsuit to collect payments that

are allegedly owed to Truland for subcontractor services
rendered and alleges that Herbert and Young “knowingly and/or
wrongfully retained” those payments.

(Compl. ¶¶ 123, 125.)

Payments for subcontract services performed fall within the Stay
Lift and Receiver Order6 definition of property as either
accounts,7 general intangibles,8 or proceeds thereof.9

5

Cf.

The Court ordered supplemental briefing to address
this issue because Defendants raised it for the first time at
oral argument. (See Order [Dkt. 26].)
6
Parties rely upon both the Illinois and Virginia
versions of the Uniform Commercial Code (“UCC”), Article 9.
(See Pl.’s Suppl. Br. [Dkt. 30] at 9 n.9; Herbert Suppl. Br.
[Dkt. 29] at 6 n.2.) For purposes of this proceeding, the two
states have adopted the same UCC language. Accordingly, the
Court will refer to the UCC definitional provisions.
7
See U.C.C. § 9-102(a)(2) (defining account as “a right
to payment of a monetary obligation . . . for services
rendered”); In re Straight, 200 B.R. 923, 931 (Bankr. D. Wyo.
10

Cottonwood Advisors, 2012 WL 6044843, at *3 (“The cases
uniformly hold that money owed to the entity in receivership is
a receivership asset.”).

The nature of the property and this

proceeding do not change simply because Yancey bases his claim
against Herbert and Young on the Maryland Construction Trust
Fund Statute.

Regardless of the theory of relief, the claims

seek only to recover alleged receivership property and are
ancillary to Yancey’s role as Receiver.

(See Receiver Order ¶ 7

(authorizing Yancey to “institute and prosecute all such claims,
actions, suits, insurance matters and the like . . . as may be
necessary in his judgment for the proper protection of the
Receivership Property”).10

1996) (interpreting Wyoming law to conclude that subcontractor’s
right to monies owed for contract services falls “squarely into
the definition of an account, i.e., a ‘right to payment
for . . . services rendered which is not evidenced by an
instrument or chattel paper”); Lions Farms, Inc. v. Caprock
Indus., Inc., 54 B.R. 241, 244-45 (D. Kan. 1985) (same under
Kansas law).
8
See U.C.C. § 9-102(a)(42) (establishing residual
category for personal property that is not an account, a
commercial tort claim, or other excluded category).
9
See U.C.C. § 9-102(a)(64)(defining “proceeds” to
include property “arising out of collateral” or “whatever is
acquired upon the . . . disposition of collateral”).
10
Truland’s Chapter 7 Trustee submitting an affidavit
agreeing that Yancey “possesses and controls the exclusive right
to pursue” these claims against Herbert and Young. (See Trustee
Acknowledgement [Dkt. 30-1] at 2.) Because there is no dispute
between the Trustee and the Receiver regarding the scope of the
Stay Lift Order, the present case does not invoke the bankruptcy
11

Second, Defendant Herbert argues that exercising
personal jurisdiction over him would violate his Fifth Amendment
due process rights.

(Herbert Reply [Dkt. 21].)

Herbert

presents this argument through the lens of a multi-factor
analysis borrowed from the Court of Appeals for the Tenth
Circuit.

See Peay v. BellSouth Med. Assistance Plan, 205 F.3d

1206 (10th Cir. 2000).

Under that analysis, Herbert emphasizes

that he has minimal contacts with Virginia, he was a minor actor
regarding the contracts at issue, and it would be inconvenient
for him to drive 72.4 miles from his home past Baltimore and
Washington, D.C. to reach this courthouse.
at 2-5.)

(See Herbert Reply

The Court finds no need to resort to Tenth Circuit law

or to linger on Herbert’s plainly inadequate due process
arguments.
The Fourth Circuit’s standard for Fifth Amendment due
process analysis is controlling here.

Under that standard,

extreme inconvenience or unfairness must outweigh “the
congressionally articulated policy of allowing the assertion of
in personam jurisdiction” in this forum.

ESAB Grp., Inc. v.

Centricut, Inc., 126 F.3d 617, 627 (4th Cir. 1997).

It is “only

in highly unusual cases that inconvenience will rise to a level

court’s “exclusive jurisdiction” to resolve such disputes.
Receiver Order ¶ 1; see also Stay Lift Order at 6.)
12

(See

of constitutional concern.”

Id. (quoting Republic of Panama v.

BCCI Holdings, 119 F.3d 935, 947 (11th Cir. 1997)).

Defendant

bears the burden of making this formidable showing.

See

D’Addario v. Geller, 264 F. Supp. 2d 367, 387 (E.D. Va. 2003).
Herbert has not carried his burden of proving extreme
inconvenience or unfairness in this case.

The statutory

authorization of nationwide service of process in receivership
proceedings would be a featherweight measure indeed if it was
outbalanced by the inconvenience to Herbert in this case.
Simply put, requiring Herbert to travel less than eighty miles
from his home to this courthouse is not constitutionally
inconvenient or unreasonable, regardless of the traffic
conditions.

See, e.g., ESAB, 126 F. 3d at 627 (finding no Fifth

Amendment concern in haling defendants from New Hampshire to
South Carolina); Terry, 2003 WL 22125300, at *5 (finding no
extreme hardship in subjecting Michigan defendant to personal
jurisdiction in Virginia). Accordingly, the Court finds that
exercising personal jurisdiction over Herbert is proper in this
case.
B.

Venue is Proper in this Ancillary Proceeding
Defendants also argue that venue is improper here

because Yancey cannot satisfy any of the bases for venue under
28 U.S.C. § 1391(b).

This case need not satisfy the section
13

1391(b) general venue requirements, however, because this
proceeding is ancillary to the appointment of a receiver and
personal jurisdiction is proper.

See Bilzerian, 378 F.3d at

1104 (“[T]he district court correctly concluded that, because
the receiver’s complaint was brought to accomplish the
objectives of the Receiver Order and was thus ancillary to the
court’s exclusive jurisdiction over the receivership estate,
venue was properly established.”); Haile, 657 F.2d at 922 n.6
(“[W]here jurisdiction is ancillary, the post-jurisdictional
consideration of venue is ancillary as well.”); Scholes v.
Lehmann, 56 F.3d 750, 753 (7th Cir. 1995) (“The laying of venue
. . . is authorized by 28 U.S.C. § 754, which allows a receiver
to sue in the district in which he was appointed to enforce
claims anywhere in the country.”); Hodgson v. Gilmartin, No. 061944, 2006 WL 2707397, at *7 (E.D. Pa. Sept. 18, 2006).
Accordingly, venue is proper in this Court.
Although venue and personal jurisdiction are proper,
the Court will exercise its discretion to transfer.
C.

Transfer Pursuant to 28 U.S.C. § 1404(a)
Section 1404(a) provides that, “[f]or 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
14

division to which all parties have consented.”
§ 1404(a).

28 U.S.C.

To make that determination, the Court must consider

“(1) whether the claims might have been brought in the
transferee forum; and (2) whether the interest of justice and
convenience of the parties and witnesses justify transfer to
that forum.”

Nader v. McAuliffe, 549 F. Supp. 2d. 760, 762

(E.D. Va. 2008) (quoting JTH Tax, Inc. v. Lee, 482 F. Supp. 2d.
731, 735 (E.D. Va. 2007)).
The first requirement is easily met in this case.

“In

order to demonstrate that an action might have been brought in a
proposed transferee district, a movant must establish that both
venue and jurisdiction with respect to each defendant is proper
in the transferee district.”

Koh v. Microtek Int’l, Inc., 250

F. Supp. 2d. 627, 630 (E.D. Va. 2003).

The District of Maryland

has personal jurisdiction11 over all Defendants and venue12 is
proper in Maryland.

11

Yancey does not argue otherwise.

Herbert and Young are individuals domiciled in
Maryland. (See Compl. ¶¶ 17, 18.) Nationwide is a Maryland
corporation with its principal place of business in Maryland.
(See Compl. ¶ 16.) Thus, the Maryland court has general
personal jurisdiction over those Defendants. See Md. Code Ann.,
Cts. & Jud. Proc. § 6-102(a). The Maryland court has specific
jurisdiction over Fidelity because Fidelity contracted to act as
surety for a contract to be performed in Maryland. See id. § 6102(b)(6).
12
Venue is proper in Maryland pursuant to 28 U.S.C.
§ 1391(b)(2) because, as the Complaint states, all counts “arise
15

Looking to the second part of the section 1404(a)
analysis, the court must determine whether convenience and the
interest of justice support transfer.

Within that analysis

courts consider several factors, including: “(1) the plaintiff’s
[initial] choice of venue; (2) witness convenience and access;
(3) the convenience of the parties; and (4) the interest of
justice.”

Nader v. McAuliffe, 549 F. Supp. 2d 760, 762 (E.D.

Va. 2008).

As discussed below, these factors weigh in favor of

transfer.
At the outset, the Court notes that Yancey’s briefing
does not oppose Defendants’ characterization of the transfer
factors.

Thus, the Court will accept Defendants’ recitation of

facts regarding convenience and the interest of justice as
uncontested.

Additionally, as explained further below, the

Court will apply the section 1404(a) analysis without reference
to the forum-selection clauses contained in several of the
contracts and bonds at issue.13

out of work performed by Truland” in Maryland. (Compl. ¶¶ 19,
50.)
13
Ignoring the forum-selection clauses could affect the
Court’s transfer analysis in two ways. First, if a valid forumselection clause applies, the plaintiff’s choice of forum is
entitled to no weight and the burden shifts to the plaintiff to
demonstrate that transfer is not warranted pursuant to the
clause. See Atl. Marine Const. Co. v. U.S. Dist. Court for the
W. Dist. of Tex., 134 S. Ct. 568, 581 (2013). Second, if a
valid forum-selection clause is present, the court should not
16

1.

Plaintiff’s Choice of Forum

The Court will first consider the significance of
Yancey’s choice of forum.

A plaintiff’s choice of forum is

generally entitled to substantial weight.

Telepharmacy

Solutions, Inc. v. Pickpoint Corp., 238 F. Supp. 2d 741, 743
(E.D. Va. 2003).

That weight, however, “varies with the

significance of the contacts between the venue chosen by the
plaintiff and the underlying cause of action.”

Pragmatus AV,

LLC v. Facebook, Inc., 769 F. Supp. 2d 991, 995 (E.D. Va. 2011).
Yancey has three connections to this forum: (1) this Court
appointed him as receiver; (2) Yancey has his principal place of
business in Virginia; and (3) Truland was formerly at home in
this District.

Thus, the connections between Yancey and this

forum entitle his choice of venue to some weight.

That weight,

however, is reduced slightly by the fact that Virginia has very
little, if any, connection to the factual circumstances giving
rise to this suit.

Accordingly, Yancey’s choice is entitled to

some, but not dispositive, weight.

consider private convenience factors in its analysis. Id.;
Beatgasm, LLC v. Punchkick Interactive, Inc., No. 2:14-cv-611,
2015 WL 4394260, at *2 (E.D. Va. June 25, 2015) (noting these
changes to the transfer analysis). If the Court did consider
the forum-selection clauses, the above changes to the analysis
would increase the likelihood of transfer. Because the Court
concludes that transfer is justified even without the clauses,
Defendants do not suffer any prejudice from the Court’s decision
to forego considering the clauses.
17

2.

Convenience of Parties

Next, the Court considers the parties’ convenience of
litigating in either forum.

Under this factor, “convenience to

parties rarely, if ever, operates to justify transfer” when the
plaintiff files in his home forum.

Bd. of Trs., Sheet Metal

Workers Nat’l Fund v. Baylor Heating & Air Conditioning, Inc.,
702 F. Supp. 1253, 1259 (E.D. Va. 1988).

“Therefore, even

though a defendant may be inconvenienced by litigating an action
in a plaintiff’s home district, a transfer is not appropriate
where it would likely only serve to shift the balance of
inconvenience from the plaintiff to the defendant.”

JTH Tax,

Inc. v. Lee, 482 F. Supp. 2d 731, 738 (E.D. Va. 2007).
As described above, Yancey is at home in this
District, as was Truland.

Accordingly, Defendants must show

that they are inconvenienced by litigating in this forum to such
a degree that transfer to Maryland would do more than merely
shift inconvenience to Yancey.

Defendants’ sole argument on

this issue is that “Maryland is more convenient for the majority
of defendants, who are either citizens of Maryland or reside in
Maryland.”

(Mem. in Supp. Transfer at 11.)

This conclusory

statement is devoid of sufficient facts for the Court to
evaluate just how inconvenient it is for Defendants to defend in
Alexandria, Virginia, which could be more accessible to areas in
18

Maryland than the federal district courts in Baltimore and
Greenbelt.14

Accordingly, the Court finds that Defendants have

not shown that the convenience of the parties weighs in favor of
transfer.
3.

Convenience of Witnesses and Access to Proof

“The party asserting witness inconvenience has the
burden to proffer, by affidavit or otherwise, sufficient details
respecting the witnesses and their potential testimony to enable
the court to assess the materiality of evidence and the degree
of inconvenience.”

Koh, 250 F. Supp. 2d at 636.

Defendants

note that witness convenience weighs in favor of transfer
because “it may be necessary for the parties, experts, and other
witnesses to inspect or view the project sites,” which are all
located in Maryland.

(Mem. in Supp. Transfer at 11.)

This

Court typically requires more detailed proffers regarding the
specific witnesses inconvenienced and the materiality of their
testimony.

However, Yancey does not dispute the assertion that

Maryland is more convenient for witnesses and that assertion is
reasonable given that all three construction sites are located
in Maryland.

14

Cf. Guy F. Atkinson Constr. v. Ohio Mun. Elec.

This appears particularly true with respect to
Defendant Young, who lives in La Plata, Maryland, which is
geographically closer to this federal courthouse than the
Maryland alternatives. (Compl. ¶ 17.)
19

Generation Agency Joint Venture 5, 943 F. Supp. 626, 629 (S.D.W.
Va. 1996) (weighing convenience in favor of location of
construction site and locus of dispute).

Accordingly, witness

convenience and access weigh slightly in favor of transfer.
4.

Interest of Justice

The factor weighing heaviest in this particular case
is the interest of justice.

The interest of justice is a

purposefully broad category, taking into account all factors
other than convenience and the parties’ initial choice of venue.
See Precision Franchising, LLC v. Coombs, 1:06-cv-1148, 2006 WL
3840334, at *6 (E.D. Va. Dec. 27, 2006).

Courts often consider

factors such as judicial economy, avoidance of inconsistent
judgments, interest in having local controversies decided at
home, knowledge of applicable law, unfairness in burdening forum
citizens with jury duty, and interest in avoiding unnecessary
conflicts of law.

Byerson v. Equifax Info. Servs., LLC, 467 F.

Supp. 2d. 627, 635 (E.D. Va. 2006).

Defendants have presented

several unrebutted factors within this category that tip the
scale toward transfer.
The interest in having localized controversies
resolved at home weighs heavily in favor of transfer in this
case.

See In re Volkswagen of Am., Inc., 545 F.3d 304, 318 (5th

Cir. 2008) (noting this factor weighs heavily in favor of
20

transfer in case with no factual connection to plaintiffs’
chosen forum).

This factor is particularly relevant here

because the state of Maryland owns the construction projects at
issue and hired the general contractor that hired Nationwide.
Additionally, the locus of operative facts is Maryland and three
of the four Defendants are Maryland residents.

It is also

preferable for Maryland to resolve this case because the
disputes turn on issues of Maryland law.

See Gen. Foam Plastics

Corp. v. Kraemer Export Corp., 806 F. Supp. 88, 90 (E.D. Va.
1992).

These factors weigh heavily in favor of transfer.15
On balance, the Court finds that the interest of

justice outweighs Yancey’s choice of forum.

See Byerson, 467 F.

Supp. 2d at 635 (noting interest of justice may be decisive
factor, “even though the convenience of the parties and
witnesses point in a different direction”); 15 Fed. Prac. &

15

Yancey argues in a footnote that proceeding in this
Court would avoid piecemeal litigation. (See Mem. in Opp’n to
Transfer at 6 n.3.) This argument arises from Yancey’s belief
that the Receiver Order requires “any claim that the Defendants
may bring as a setoff or counterclaim” to be brought in this
Court. (Id. (citing Receiver Order ¶ 3).) Yancey does not
direct the Court to the particular language in the Receiver
Order requiring setoffs or counterclaims to be brought
exclusively in this Court when a related proceeding is pending
against the same defendants elsewhere. Assuming arguendo that
the Order does command that result, this Court could easily
prevent inconsistent judgments and preserve judicial economy by
transferring those setoffs and counterclaims to the related
proceeding.
21

Proc. Juris. § 3847 (4th ed.) (noting importance of interest of
justice factor); see also Perdue Farms, Inc. v. Design Build
Contracting Corp., 263 F. App’x 380, 382 (4th Cir. 2008) (noting
district court transferred construction contract claim to forum
where “construction site is located”).

Witness convenience and

access also weighs slightly in favor of transfer.

Accordingly,

the Court will transfer this case to the District of Maryland
pursuant to 28 U.S.C. § 1404(a).
D.

Forum-Selection Clause
As a last issue, the Court will briefly address

Defendants’16 forum-selection clause arguments and explain why
the Court did not rely upon that clause.17

The contracts between

the general contractor and Nationwide contain the following
forum-selection clause: “In the event of any lawsuit under this
clause, the Courts of Maryland shall have sole and exclusive

16

Only Defendants Young, Nationwide, and Fidelity sought
to enforce the forum-selection clause.
17
The Court recognizes that the applicability of the
forum-selection clause changes the transferee court’s choice-oflaw analysis. Typically, a court receiving a 1404(a) transfer
must apply the choice-of-law principles from the transferor
court. See Atl. Marine Const. Co. v. U.S. Dist. Court for the
W. Dist. of Tex., 134 S. Ct. 568, 582 (2013). But when a
plaintiff files suit in violation of a forum-selection clause,
“the contractually selected venue should not apply the law of
the transferor venue to which the parties waived their right.”
Id. at 583. That distinction is immaterial in this case,
however, because the contracts at issue dictate that Maryland
law applies and the claims against the individual defendants
arise from a Maryland statute.
22

jurisdiction.”

(UMD Subcontract ¶ 11(c) [Dkt. 1-5] at 9; Travel

Plaza Subcontract ¶ 11(c) [Dkt. 1-7] at 11.)

Defendants argue

that this clause renders venue “improper” in this Court.
Mem. in Supp. Transfer at 6-7.)

(See

Thus, Defendants contend that

the forum-selection clause, if applicable, mandates dismissal
under Rule 12(b)(3) or transfer for lack of venue under 28
U.S.C. § 1406(a).

Those arguments are based on a

misunderstanding of how forum-selection clauses affect venue.
The Supreme Court recently clarified the proper
procedure for a civil defendant to follow to enforce a forumselection clause.

See Atl. Marine Const. Co. v. U.S. Dist.

Court for W. Dist. of Tex., 134 S. Ct. 568, 579-80 (2013).

In

Atlantic Marine, the Supreme Court explained that “1406(a) and
Rule 12(b)(3) allow dismissal only when venue is ‘wrong’ or
‘improper.’”

Id. at 577.

But whether venue is proper depends

on federal venue statutes and “a forum selection clause has no
effect on the inquiry.”

Devil’s Advocate, LLC v. Grynberg

Petroleum Co., 588 F. App’x 264, 264 (4th Cir. 2014) (citing
Atl. Marine, 134 S. Ct. at 577).

Instead of enforcing a forum-

selection clause through Rule 12(b)(3) or section 1406(a), a
party may seek to transfer under 28 U.S.C. § 1404(a), which
“does not condition transfer on the initial forum’s being
‘wrong.’”

Atl. Marine, 134 S. Ct. at 577.
23

Accordingly, the

Court must deny Defendants’ 12(b)(3) motion to dismiss for
improper venue under the forum-selection clause.
The Supreme Court did acknowledge that a forumselection clause may justify dismissal when the clause points to
a nonfederal forum.

But in the event the clause points to a

state or foreign forum, it is forum non conveniens that may
permit dismissal, not Rule 12(b)(3).

See id. at 580; Devil’s

Advocate, 588 F. App’x at 264 (finding forum non conveniens did
not justify dismissal because clause permitted federal forum);
Harmon v. Dyncorp Int’l, Inc., No. 1:13cv1597, 2015 WL 518594,
at *8-9 (E.D. Va. Feb. 6, 2015) (applying forum non conveniens
analysis under Atlantic Marine).

If forum non conveniens is at

issue, “courts should evaluate a forum-selection clause pointing
to a nonfederal forum in the same way that they evaluate a
forum-selection clause pointing to a federal forum.”
Marine, 134 S. Ct. at 580.

Atl.

The district court has “substantial

flexibility in evaluating a forum non conveniens motion.”

Van

Cauwenberghe v. Baird, 486 U.S. 517, 529 (1988).
Under Fourth Circuit law, the forum-selection clause
at issue in this case points to a nonfederal forum.18

18

The clause

Federal law governs the interpretation of a forumselection clause. See Albermarle Corp v. AstraZeneca UK Ltd.,
628 F.3d 643, 651 (4th Cir. 2010). The forum-selection clause
at issue in this case, however, must be read in the context of
24

refers to “Courts of Maryland,” which courts typically interpret
as limiting “jurisdiction over the parties’ dispute to the state
courts of the named state.”

FindWhere Holdings, Inc. v. Sys.

Env’t Optimization, LLC, 626 F.3d 752, 755 (4th Cir. 2010); Doe
1 v. AOL, LLC, 552 F.3d 1077, 1082 (9th Cir. 2009) (concluding
that “Courts of Virginia” refers to Virginia state courts only);
Weener Plastics, Inc. v. HNH Packaging, LLC, No. 5:08-cv-496,
2009 WL 2591291, at *7 (E.D.N.C. Aug. 19, 2009) (“‘[C]ourts of
North Carolina’ refers exclusively to the state courts of North
Carolina . . . .”); Koch v. Am. Online, Inc., 139 F. Supp. 2d
690, 694 (D. Md. 2000) (concluding “courts of Commonwealth of
Virginia” refers exclusively to Virginia state courts).

No

party in this case recognized that “Courts of Maryland” does not
include federal courts, which are merely courts “in Maryland.”
See FindWhere Holdings, 626 F.3d at 755 (distinguishing between
courts “of” a state and courts “in” a state).

To the contrary,

Defendants consistently argued that the forum-selection clause
here points to Maryland’s federal courts, such as when

Maryland law because the contract designates that Maryland law
should apply. Id. The choice of law is not significant in this
case, however, because Maryland has generally adopted the
federal standards for interpreting forum-selection clauses. See
Main Line Mech. of Va., Inc. v. Herman/Stewart Const. & Devel.,
Inc., No. 11cv203, 2011 WL 3880462, at *2 (D. Md. Sept. 1, 2011)
(“Maryland courts have adopted the federal standard in analyzing
the enforceability of a forum-selection clause.” (quoting Gilman
v. Wheat, First Sec., Inc., 692 A.2d 454, 463 (Md. 1997)).
25

Defendants argued “THE COURT SHOULD TRANSFER THIS CASE TO THE
DISTRICT OF MARYLAND UNDER THE FORUM SELECTION CLAUSE.”
in Supp. Transfer at 9 (formatting in original).)

(Mem.

Defendants’

memoranda contain many similar requests to transfer to Maryland
federal court.

(See Mem. in Supp. Transfer at 2, 7, 9, 11;

Reply in Supp. Transfer at 7, 8, 9.)
Because the forum-selection clause at issue points to
a nonfederal forum, the appropriate procedure for applying the
clause is forum non conveniens.

No party, however, has argued

that forum non conveniens requires dismissal of this case.

The

Court will not reach that conclusion sua sponte for several
reasons.19

First, because Defendants did not assert that state

court is the proper forum, this Court heard no argument on the
reasonableness of barring a federal receiver from enforcing a
federal order in a federal forum.

Without such argument, a

forum non conveniens dismissal would be imprudent in this case.
Second, the Court cannot rule out the possibility that
Defendants intentionally waived a forum non conveniens argument
because they preferred this case to proceed in a federal, rather

19

The Fourth Circuit has recognized a district court’s
authority to sua sponte apply forum non conveniens. See United
States v. Moussaoui, 483 F.3d 220, 246 (4th Cir. 2007).
26

than state, forum.20

Thus, the Court will not sua sponte apply a

doctrine that no party has advocated for, that could
unreasonably affect the federal Receiver’s rights, and that
Defendants potentially waived or do not desire.
I.

Conclusion

For the reasons stated above, the Court will deny the
motions to dismiss for lack of venue and lack of personal
jurisdiction.

The Court will grant the motion to transfer to

the U.S. District Court for the District of Maryland pursuant to
28 U.S.C. § 1404(a).
An appropriate order will issue.

May 25, 2016
Alexandria, Virginia

20

/s/
James C. Cacheris
UNITED STATES DISTRICT COURT JUDGE

For a discussion of waiver of a forum-selection
clause, see Whiting-Turner Contracting Co. v. Westchester Fire
Ins. Co., No. JFM-13-348, 2013 WL 3177881, at *5 (D. Md. June
20, 2013).
27