Lagerstorm et al v. Enterprise Bank & Trust
Filing
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MEMORANDUM AND ORDER denying as moot 6 Enterprise's Motion to Dismiss; and granting 10 Enterprise's Amended Motion to Dismiss or Transfer. Signed by District Judge J. Thomas Marten on 3/18/14. (mss)[Transferred from ksd on 3/19/2014.]
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF KANSAS
JULIANNE LAGERSTROM, et al.,
Plaintiff,
v.
Case No. 13-2531-JTM
ENTERPRISE BANK & TRUST,
Defendant.
MEMORANDUM AND ORDER
Plaintiffs Clare Blasi, Gloria Garrett and Julianne Lagerstrom filed suit alleging
Enterprise Bank & Trust violated the Equal Credit Opportunity Act by requiring each of
the plaintiffs to sign a guaranty on loans sought by a third party. The matter is now
before the court on defendant Enterprise’s Amended Motion to Dismiss or Transfer
(Dkt. 10). After reviewing the parties’ briefs on the motion, the court is prepared to rule.
The court grants the motion to transfer for the reasons stated below. As a result, the
court does not address the merits of Enterprise’s motion to dismiss, which would be
more appropriately addressed by the transferee court.
I. Background
Table Rock Canyon, LLC is a limited liability company organized and existing
under the laws of Missouri. Frontline Development, LLC is another Missouri limited
liability company that is a member and sole manager of Table Rock Canyon. Nicholas
Blasi, Gordon Garrett and Cory Lagerstrom were members of Frontline Development at
all times relevant to this suit. Clare Blasi, Gloria Garrett and Julianne Lagerstrom are the
respective wives of Nicholas Blasi, Gordon Garrett and Cory Lagerstrom. They are not
members or managers of Table Rock Canyon or Frontline Development, and they do
not hold any legal interest in either company. Enterprise Bank & Trust is a trust
corporation and chartered bank organized and existing under Missouri law, with its
headquarters in Missouri and an office location in Overland Park, Kansas.
On July 30, 2007, Table Rock Canyon entered into a loan agreement with
Enterprise. As a condition of issuing the loan to Table Rock Canyon, Enterprise
required Clare Blasi, Gloria Garrett and Julianne Lagerstrom to sign guaranties and
multiple periodic consents regarding the enforceability of their guaranties. The
plaintiffs claim that by requiring them to execute the guaranties and consents,
Enterprise discriminated against them on the basis of marital status in violation of the
Equal Credit Opportunity Act, 15 U.S.C. § 1691(a) and Regulation B, 12 C.F.R. § 202.7.
Enterprise now moves the court to transfer the case to the Western District of
Missouri, citing the forum-selection provision contained in each of the guaranties
signed by the plaintiffs.
II. Legal Standard – Motion to Transfer
“For 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 division to which all parties have consented.” 28
U.S.C. § 1404(a) (2012). A forum-selection clause can be enforced by a motion to transfer
under 29 U.S.C. § 1404(a). Atl. Marine Constr. Co. v. U.S. Dist. Ct. for W. Dist. of Tex., 134
S. Ct. 568, 579 (2013). The decision whether to grant a motion to transfer is within the
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sound discretion of the district court. See Scheidt v. Klein, 956 F.2d 963, 965 (10th Cir.
1992).
“In the typical case not involving a forum-selection clause, a district court
considering a § 1404(a) motion (or a forum non conveniens motion) must evaluate both
the convenience of the parties and various public-interest considerations.” Atl. Marine
Constr. Co., 134 S. Ct. at 581. Ordinarily, the district court would weigh the relevant
factors and decide whether, on balance, a transfer would serve “the convenience of
parties and witnesses” and otherwise promote “the interest of justice.” Id. (citing
§ 1404(a)). The calculus changes, however, when the parties’ contract contains a valid
forum-selection clause, which “represents the parties’ agreement as to the most proper
forum.” Id. (quoting Stewart Organization, Inc. v. Ricoh Corp., 487 U.S. 22, 31 (1988)). “[A]
valid forum-selection clause should be given controlling weight in all but the most
exceptional cases.” Id. (internal citation omitted).
“The presence of a valid forum-selection clause requires district courts to adjust
their usual § 1404(a) analysis in three ways.” Id. “First, the plaintiff’s choice of forum
merits no weight.” Id. “Rather, as the party defying the forum-selection clause, the
plaintiff bears the burden of establishing that transfer to the forum for which the parties
bargained is unwarranted.” Id. “Second, a court evaluating a defendant’s § 1404(a)
motion to transfer based on a forum-selection clause should not consider arguments
about the parties’ private interests.” Id. at 582. “When parties agree to a forum-selection
clause, they waive the right to challenge the preselected forum as inconvenient or less
convenient for themselves or their witnesses, or for their pursuit of the litigation.” Id.
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“A court accordingly must deem the private-interest factors to weigh entirely in favor of
the preselected forum.” Id. “As a consequence, a district court may consider arguments
about public-interest factors only.” Id. “Because those factors will rarely defeat a
transfer motion, the practical result is that forum-selection clauses should control except
in unusual cases.” Id. “Third, when a party bound by a forum-selection clause flouts its
contractual obligation and files suit in a different forum, a § 1404(a) transfer of venue
will not carry with it the original venue’s choice-of-law rules—a factor that in some
circumstances may affect public-interest considerations.” Id. In other words, there is no
potential conflict of laws issue for the court to consider because the transferee court will
apply its own laws. See id. at 582–83.
“When parties have contracted in advance to litigate disputes in a particular
forum, courts should not unnecessarily disrupt the parties’ settled expectations.” Id. at
583. “In all but the most unusual cases, therefore, ‘the interest of justice’ is served by
holding parties to their bargain.” Id. “[T]he plaintiff must bear the burden of showing
why the court should not transfer the case to the forum to which the parties agreed.” Id.
at 582.
III. Analysis
Enterprise argues that this case should be transferred to the Western District of
Missouri because the guaranties signed by the plaintiffs limited their choice of forum to
the state and federal courts in Jackson County, Missouri. The guaranties contain the
following forum consent clause:
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14. Consent to Forum. As part of the consideration for new value this day
received, each Guarantor consents to the jurisdiction of any state and
federal court located within Jackson County, Missouri and waives
personal service of any and all process upon such Guarantor and consents
that all such service of process be made by certified or registered mail
directed to such Guarantor at the last known address of such Guarantor as
reflected in the Lender’s records, and service so made shall be deemed to
be complete upon delivery thereto. Each Guarantor waives any objection
to jurisdiction and venue in any action instituted against such Guarantor
as provided herein and agrees not to assert any defense based on lack of
jurisdiction or venue. Each Guarantor further agrees not to assert against
the Lender (except by way of a defense or counterclaim in a proceeding
initiated by the Lender) any claim or other assertion of liability with
respect to this Guaranty, the Obligations, any of the Transaction
Documents, the Lender’s actions or inactions in respect of any of the
foregoing or otherwise in any jurisdiction other than the foregoing
jurisdictions. Nothing in this Section shall affect the right of the Lender to
serve legal process in any other manner permitted by law or affect the
right of the Lender to bring any action or proceeding against Guarantor in
the courts of any other jurisdictions or limit the right of the Lender to
exercise any non-judicial remedies available to the Lender.
Dkt. 11, Exh. 1 at 4 ¶ 14, Ex. 2 at 4 ¶ 14, Ex. 3 at 4 ¶ 14.
Although this paragraph is not a model of clarity, the court finds no ambiguity in
its terms regarding the limitations on where the guarantor(s) may file suit. The third
sentence is the only sentence that references the guarantor’s right to file suit. It states
that the guarantor “agrees not to assert against the Lender . . . any claim . . . with respect
to this Guaranty . . . in any jurisdiction other than the foregoing jurisdictions.” This
language clearly establishes a mandatory, rather than permissive, forum selection
clause. See SBKC Service Corp. v. 1111 Prospect Partners, L.P., 105 F.3d 578, 582 (10th Cir.
1997) (stating that the language of a mandatory forum selection clause must “disclose
an intent to exclude other venues.”). The word “foregoing” signals that the reader will
find listed above the exclusive jurisdictions where the guarantor may file. Looking
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above this signal word, the reader can only find listed the jurisdiction of the state and
federal courts in Jackson County, Missouri. Therefore, the straightforward reading of
this paragraph restricts the guarantor to filing suit against Enterprise in Jackson
County, Missouri.
The plaintiffs argue for a different reading of the paragraph. The reading they
urge begins with the fourth sentence, which allows the lender to bring any action or
proceeding against the guarantor in any other jurisdiction. They then turn to the second
sentence, in which the guarantor agrees to waive objections and defenses based on
jurisdiction and venue in any action brought against the guarantor “as provided
herein . . . .” The plaintiffs argue that the phrase “as provided herein” references cases
filed by the lender in any of the jurisdictions allowed by the paragraph, which the
fourth sentence broadens beyond Jackson County, Missouri. Reading sentence two as
containing a reference to the unrestricted jurisdictions the lender might file suit in, the
plaintiffs argue that the third sentence’s reference to “the foregoing jurisdictions”
implicitly includes these other jurisdictions.
The court disagrees. The plaintiffs read into the second sentence a reference to
jurisdictions that does not appear. The second sentence merely establishes that the
guarantor waives any objections to jurisdiction and venue in any case brought against
them by the lender. Although the phrase “as provided herein” clearly refers to cases
brought in other jurisdictions, there is no reference in the second sentence to other
jurisdictions.
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Additionally, the third sentence contains an important caveat that the plaintiffs
ignore in arguing for their interpretation. It states that the guarantor agrees not to assert
any claims against the lender in any jurisdiction other than the foregoing jurisdictions,
“except by way of a defense or counterclaim in a proceeding initiated by the lender.”
This establishes that the forum-selection restriction on the guarantor bringing claims
against the lender does not apply to claims brought as defenses or counterclaims,
because these can be brought in any jurisdiction that the guarantor is sued in, that is,
any jurisdiction in which the lender may sue the guarantor. If the guarantor were
allowed to file suit in any jurisdiction in which the lender was allowed to file suit, this
caveat would be meaningless, violating the rule that courts are to avoid interpretations
that result in meaningless terms. See, e.g., Wildflower Cmty. Ass’n, Inc. v. Rinderknecht, 25
S.W.3d 530, 534 (Mo. Ct. App. 2000).
The third sentence restricts the guarantor from filing suit against the lender “in
any jurisdiction other than the foregoing jurisdictions,” and the foregoing jurisdictions
mentioned in the paragraph are those of the state and federal courts found in Jackson
County, Missouri. A straightforward reading suggests that this is a mandatory forum
selection clause, restricting the plaintiffs from filing suit against Enterprise in any court
outside Jackson County.
The court’s § 1404(a) analysis incorporates the modified analysis required when
the motion to transfer is based on a mandatory forum selection clause. The plaintiffs
must bear the burden of showing why the court should not transfer the case to the
Western District of Missouri. See Atl. Marine Constr. Co., 134 S. Ct. at 582. The plaintiffs’
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choice of forum of the District of Kansas merits no weight, as it was in violation of the
agreed-upon forum. See id. at 581. The court will not consider arguments about the
plaintiffs’ private interests; only public-interest factors are relevant. See id. at 582. And
finally, the court does not consider conflict of law issues, as the Western District of
Missouri would apply Missouri law if the court transfers the case. See id.
The plaintiffs focused all of their arguments against transfer on whether the
forum selection clause restricted their right to file suit in the District of Kansas. They did
not argue that public-interest factors weigh in their favor. As a result, the plaintiffs fail
to meet their burden of showing why the court should not transfer the case.
IV. Conclusion
The court grants Enterprise’s motion to transfer the case to the U.S. District Court
for the Western District of Missouri because of the forum selection clause in each
contract between the plaintiffs and defendant. As a result of the transfer, the court does
not reach the merits of Enterprise’s motion to dismiss, leaving these arguments for the
transferee court to consider.
IT IS THEREFORE ORDERED this 18th day of March, 2014, that Enterprise’s
Amended Motion to Dismiss or Transfer (Dkt. 10) is granted to the extent set forth
above.
IT IS ALSO ORDERED that Enterprise’s amended motion supersedes its original
Motion to Dismiss or Transfer (Dkt. 6), which the court denies as moot.
s/ J. Thomas Marten
J. THOMAS MARTEN, JUDGE
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