Berger et al v. Bank of Colorado
ORDER DENYING 3 DEFENDANT'S MOTION TO TRANSFER VENUE. Signed by Magistrate Judge Timothy J. Cavan on 11/27/2017. (JDR)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MONTANA
JEFFREY W. BERGER, TAMI M.
BERGER, WIBAUX 1, LLC, PROFRAC HEATING & TRUCKING,
TO TRANSFER VENUE
BANK OF COLORADO,
Plaintiffs Jeffrey W. Berger, Tami M. Berger, Wibaux 1, LLC, and Pro-Frac
Heating & Trucking LLC (“Plaintiffs”) initiated this action in Montana state court
against Defendant Bank of Colorado (the “Bank”) arising out of the financing of
agricultural land Plaintiffs purchased in Montana, North Dakota and South Dakota.
Plaintiffs bring claims for negligent misrepresentation, breach of fiduciary duty,
fraud and undue influence, breach of the duty of good faith and fair dealing,
contractive adhesion, and punitive damages. (Doc. 8.)
The Bank removed the matter to this Court invoking the Court’s diversity
jurisdiction under 28 U.S.C. § 1332. (Doc. 1.) Judge Watters has referred the case
to the undersigned under 28 U.S.C. § 636(b)(1)(B). (Doc. 18.) Presently before
the Court is the Bank’s Motion to Transfer Venue. (Doc. 3.) The motion is fully
briefed and ripe for the Court’s review. (Docs. 4, 15, 16, 19.)
Having considered the parties’ submissions, the Court finds the Bank’s
motion should be DENIED. 1
Plaintiffs Jeffrey and Tami Berger (the “Bergers”) reside in both Montana
and North Dakota. (Docs. 15-1 at ¶ 6; 15-2 at ¶ 5.) Plaintiff Wibaux 1, LLC
(“Wibaux 1”) is a Montana limited liability company that conducts farming and
ranching operations in Montana, North Dakota, and South Dakota. (Docs. 3-1 at ¶
5; 15-1 at ¶ 5; 15-2 at ¶ 6.) The Bergers are the sole members of Wibaux 1. (Doc.
8 at ¶ 2.) Plaintiff Pro-Frac Heating & Trucking, LLC (“Pro-Frac”) is a North
Dakota limited liability company that does business in North Dakota.2 (Doc. 3-1 at
¶ 6.) Jeffrey Berger is the sole member of Pro-Frac. (Doc. 8 at ¶ 3.) Defendant
A motion to change venue is a non-dispositive pre-trial matter, and is therefore
within the province of a magistrate judge’s authority under 28 U.S.C. §
636(b)(1)(A). RD Rod, LLC v. Mont. Classic Cars, LLC, 2012 WL 6632185, *7,
n.1 (D. Mont. Dec. 19, 2012) (“A change of venue ruling is a non-dispositive
matter which need not be submitted as a ‘proposed findings of fact and
recommendations’ to the District Judge as otherwise required under 28 U.S.C. §
636(b)(1)(B) with respect to dispositive motions.”).
The Bank notes that Jeffrey Berger incorporated a similarly named entity, called
Pro-Frac Heating & Trucking RBU, LLC in Colorado and listed Windsor,
Colorado as its principle place of business. (Doc. 16-1.)
Bank of Colorado is a Colorado corporation that operates solely in Colorado.
(Doc. 3-1 at ¶¶11, 12.)
In 2012, the Bergers financed the purchase of a residence and a commercial
lot in Estates Park, Colorado through the Bank. (Docs. 3-1 at ¶ 7; 3-5; 3-6; 3-7;
and 8 at ¶ 5.) Then, in 2013, the Bank loaned additional funds to the Bergers to
finance the purchase of agricultural land located in Montana, North Dakota, and
South Dakota. (Docs. 3-1 at ¶ 19; 8 at ¶ 5.) The financing agreements associated
with the purchase of the agricultural land are the subject of this lawsuit.
Between March 2013 and May 2015, Plaintiffs purchased five ranches in
Montana, and one ranch located in both North Dakota and South Dakota. (Docs.
3-12; 3-13; 15-1 at ¶ 5; 15-2 at ¶ 6; 8 at ¶ 6.) The ranch properties were purchased
in the name of Wibaux 1. (Id.) The Bank provided approximately 50% of the
financing for the purchase prices of the properties, and Plaintiffs used their own
funds for the balance. (Doc. 8 at ¶ 6.) In December 2013, the Bank also loaned
Plaintiffs over $7.5 million to buy cattle for the Montana ranches (the “Chattel
Loan”). (Docs. 3-1 at ¶ 19; 8 at ¶ 7.)
In the summer of 2015, Plaintiffs sought to consolidate their six real estate
loans, and the Bank agreed to do so. (Doc. 15-1 at ¶ 10.) As a result, in late
November 2015, Plaintiffs executed a $19.5 million Consolidated Real Estate Loan
Agreement. (Id.) As part of the Bank’s refinancing proposal, the Bank required
Plaintiffs to agree to a modification of the Chattel Loan, and a new $4.5 million
Line of Credit Loan. (Id.) Plaintiffs allege the terms of the refinancing proposal
were unfavorable, in that certain maturity dates were shortened, the new Line of
Credit Loan was required, any default under the Chattel Loan or the Line of Credit
Loan would trigger a default of the Consolidated Real Estate Loan, and personal
guarantees were required on all three loans. (Doc. 8 at ¶ 9.) Despite the
unfavorable terms, Plaintiffs allege they agreed to the refinancing proposal based
on the Bank’s representations and assurances that the proposed terms were only a
formality, and that the Bank would extend the maturity dates of the Chattel Loan
and Line of Credit Loan as long as Plaintiffs continued to make loan payments that
were roughly the same amount as they had been paying. (Id. at ¶¶ 10-11; Doc. 151 at ¶ 10.)
In March 2016, and again in August 2016, the Bank extended the maturity
dates of the Chattel Loan and Line of Credit Loan. (Docs. 8 at ¶ 12; 15-1 at ¶11.)
However, Plaintiffs allege the Bank declined to extend the maturity dates in
October 2016, and declared the Chattel Loan, Line of Credit Loan and
Consolidated Real Estate Loan in default on October 14, 2016. (Doc. 8 at ¶ 13.)
On November 18, 2016, Plaintiffs received a banker’s box of documents
from the Bank which contained a Forbearance Agreement. (Doc. 15-1 at ¶ 11.)
Plaintiffs retained counsel in Billings, Montana to review the agreement and try to
negotiate better terms with the Bank. (Doc. 15-1 at ¶ 11; Doc 15-3.) Plaintiffs
allege the efforts were unsuccessful, and they were compelled to sign the
Forbearance Agreement to prevent imminent foreclosure, even though the terms of
the agreement were onerous and unconscionable. (Doc. 8 at ¶ 15.) Plaintiffs were
ultimately unable to meet the terms of the Forbearance Agreement. (Id. at ¶ 17.)
Plaintiffs allege the Bank is unwilling to negotiate any reasonable modifications to
the Forbearance Agreement, and instead intends to commence foreclosure
proceedings. (Id. at ¶¶ 17-18.) Plaintiffs assert that they would not be in default if
the Bank had agreed to extend the maturity dates for the Chattel Loan and Line of
Credit Loan as it had represented it would do. (Id. at ¶ 16.)
Changes of venue are governed by 28 U.S.C. § 1404(a), which provides:
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.
28 U.S.C. § 1404(a).
Whether to transfer a case is within the Court’s discretion, and a decision
whether to do so must be based on an “individualized, case-by-case consideration
of convenience and fairness.” Jones v. GNC Franchising, Inc., 211 F.3d 495, 498
(9th Cir. 2000) (citation omitted). There is no uniform list of factors that courts
must weigh to determine whether transfer is appropriate in a particular case. Id.
Factors that are frequently considered include:
the plaintiff’s choice of forum,
the location where the relevant agreements were negotiated and
the convenience of witnesses,
the ability of the two forums to compel non-party witnesses to
the respective parties’ relative contacts with the forums,
the state that is most familiar with the governing law,
the relative congestion in the two forums,
the length of time action has already been pending in the
ease of access to sources of proof, and
whether there is a ‘local interest’ in either of the forums.
Hillerich & Bradsby Co. v. Ace Am. Ins. Co., 2012 WL 2359488, *1 (D. Mont.
June 20, 2012); Jones, 211 F.3d at 498-499.
The moving party bears the burden to establish why the forum should be
changed. Commodity Futures Trading Comm’n v. Savage, 611 F.2d 270, 279 (9th
Cir. 1979). “The defendant must make a strong showing of inconvenience to
warrant upsetting the plaintiff’s choice of forum.” Decker Coal Co. v.
Commonwealth Edison Co., 805 F.2d 834, 843 (9th Cir. 1986). When a transfer
“would only shift the inconvenience from defendant to plaintiff, the motion to
transfer should be denied.” Anderson v. Thompson, 634 F.Supp. 1201, 1204 (D.
Mont. 1986). “[A] transfer is not available to a forum which is equally convenient
or inconvenient to the original forum.” Id.
It is undisputed that venue is proper in the District of Montana. Also, venue
would have been proper in the District of Colorado as it is a judicial district in
which the Bank resides, and is where a substantial part of the events or omissions
giving rise to the claim occurred.3 28 U.S.C. § 1391(b). Therefore, the Court must
weigh the relevant factors to determine whether a change of venue will serve the
interests of justice and be more convenient for the parties and witnesses.
The Bank argues this action should be transferred to the District of Colorado
because almost all of the events giving rise to the claims occurred in Colorado,
almost all of the Bank’s witnesses live in Colorado, and Plaintiffs are North
Dakota residents who have significant contacts with Colorado. Plaintiffs counter
that this action should remain in Montana because the case relates to the
disposition of approximately 80,000 acres of real property located in Montana, the
Plaintiffs do not contest that this action could have been initially filed in the
District of Colorado. Plaintiffs argue, however, that the Bank must assert a
compulsory counterclaim for foreclosure, and that claim must be adjudicated in
Montana because the property to be foreclosed upon is located in Montana. First,
for purposes of determining whether venue should be transferred, the Court looks
only at the case as it existed at the time it was filed. RD Rod, LLC, 2012 WL
6632185 at *7 (“[T]he court’s focus is on the case as it was originally filed without
regard to any ‘counterclaims interposed by the party seeking transfer.’”). Here, no
counterclaim has been asserted. Second, even assuming the Bank must file a
counterclaim for foreclosure, the counterclaim would equally have to be filed in
Montana, South Dakota and North Dakota, as the real estate securing the
agreements at issue are located in all three jurisdictions. As such, the Court is not
convinced that there can be one proceeding foreclosing all of the real property
Bergers reside here, and have had significant ongoing contacts with Montana for at
least 24 years.
Consideration of Factors
Plaintiffs’ Choice of Forum
“[A] plaintiff’s choice of forum should rarely be disturbed.” Anderson, 624
F. Supp. at 1204. The Ninth Circuit has cautioned that “[t]he defendant must make
a strong showing of inconvenience to warrant upsetting the plaintiff’s choice of
forum.” Decker Coal Co. v. Commonwealth Edison Co., 805 F.2d 834, 843 (9th
Cir. 1986). However, the plaintiff’s choice is given less deference when the
plaintiff is not a resident or citizen of the forum state. Piper Aircraft Co. Reyno,
454 U.S. 235, 255-256 (1981). In addition, “[i]f the operative facts have not
occurred within the forum and the forum has no interest in the parties or subject
matter, [the plaintiff’s] choice is entitled to only minimal consideration.” Lou v.
Belzberg, 834 F.2d 730, 739 (9th Cir. 1987).
The Bank argues Plaintiffs’ decision to file this action in Montana should be
given no deference because they have minimal contacts with Montana and the
operative facts did not occur here. The Bank asserts Plaintiffs’ residence and
principle place of business is in North Dakota. The Bank points out that Plaintiffs’
tax returns show their residence is in Williston, North Dakota, and Plaintiffs used
their North Dakota address on the agreements at issue in this case. (Doc. 3-2; 38
10; 3-18.) The Bank also argues Plaintiffs have greater contacts with Colorado
than Montana because they own a home in Estes Park, Colorado (Doc. 3-3), keep a
vehicle there, and they spend a substantial amount of time in Colorado. With
regard to the operative facts, the Bank contends Plaintiffs approached the Bank in
Colorado, all the negotiations occurred in Colorado, most of the agreements were
executed in Colorado, 4 and the loans were to be administered from Colorado and
repaid to the Bank in Colorado.
Plaintiffs counter that for the past two years they have primarily lived in
Montana, spending 80% of their time here. (Docs. 15-1, 15-2.) Plaintiff Jeff
Berger states he was a 1988 graduate of Montana State University, and after
moving to Billings, Montana in 1993, has been continuously involved with
Montana agriculture for the last 24 years. (Doc. 15-1.) Plaintiff Tami Berger,
likewise describes a long-standing presence in Montana. (Doc. 15-2.) Plaintiffs
acknowledge they have a home and vehicle in Colorado, but assert they have spent
little time in Colorado during in the past two years due to the downturn in the oil
business. (Docs. 15-1, 15-2.) Plaintiffs state they now primarily reside in
Montana, where they are involved in the day-to-day management of the five
Montana ranches that are the subject of this lawsuit. (Id.) In addition to the five
It appears that the Credit Agreements were signed in either Colorado or North
Dakota. (See e.g. Doc. 3-13.)
Montana ranches, the Plaintiffs represent that they own a home in Billings, and
have approximately 20 vehicles in Montana. (Id.) Plaintiffs further argue that the
operative facts did occur in Montana. Plaintiffs state the Bank’s employees and
officers have visited the Montana ranches at least twice a year since February
2013, and note the Forbearance Agreement was signed in Montana. (Id.)
Although the parties paint different pictures of the facts relating to where
Plaintiffs live, the Court finds Plaintiffs’ choice of forum is entitled to deference.
Recognizing it is the Bank’s burden to establish that transfer is appropriate, the
Bank has not shown that Plaintiffs do not have sufficient contacts with Montana to
be considered residents. Plaintiffs own five ranches in Montana (comprising
approximately 80,000 acres), a home in Billings, Montana, and they reportedly
spend a substantial amount of time in Montana. Plaintiffs do not dispute they used
a North Dakota address for tax purposes, and on the banking documents at issue in
this case. But the tax documents cited by the Bank are from 2013 and 2014.
(Doc. 3-2.) Plaintiffs state they have been primarily living in Montana since 2016.
Therefore, the tax documents are not necessarily inconsistent with Plaintiffs
assertions. It also appears that at least some of the operative facts occurred in
Montana. In particular, the Forbearance Agreement was executed in Billings,
Montana in December 2016, and the agreement was at least partially negotiated
within the state. The timeframe of this execution is also consistent with Plaintiffs’
assertion that for the past two years, they have primarily lived in Montana. It is
also noteworthy that the loans at issue in this case concern a large amount of
property that is located within Montana.
Therefore, the Court finds this factor weighs against transfer.
Location Where Relevant Agreements Were Negotiated and
The Bank argues Plaintiffs’ claims derive from all of the Credit Agreements,
including the Chattel Loan, Line of Credit Loan, and Consolidated Real Estate Loan,
which were negotiated and prepared in Colorado. Plaintiffs counter that the focus
of this litigation is on the Forbearance Agreement, which was negotiated from and
signed in Montana.
Although the Forbearance Agreement was the final agreement preceding this
lawsuit, Plaintiffs’ claims clearly relate to all of the underlying financing
agreements. For example, Counts One and Three specifically refer to the Chattel
Loan, Line of Credit Loan, and Consolidated Real Estate Loan. (Doc. 8 at ¶¶ 20,
24, 26.) Count Four references the Chattel Loan and Line of Credit Loan (Id. at ¶
28), and Count Five refers to the Forbearance Agreement. (Id. at ¶ 30.) Thus,
resolution of this lawsuit will necessarily entail consideration of the facts
surrounding all of the underlying loan transactions.
Because the Credit Agreements were negotiated and signed in Colorado, but
the Forbearance Agreement was signed and at least partially negotiated in
Montana, the Court finds this factor is neutral.
Convenience of Witnesses
The District of Montana is not a convenient forum for the Bank’s witnesses
who reside in Colorado. Likewise, the District of Colorado is not a convenient forum
for Plaintiffs’ witnesses who reside in Montana. “A Court should not transfer venue
when the transfer would merely shift the inconvenience from the defendant to the
plaintiff.” Hillerich & Bradsby Co., 2012 WL 2359488 at *2. Accordingly, the
Court finds this factor weighs against transfer.
Ability of Forum to Compel Non-Party Witnesses to Testify
The Bank has identified 22 employees as potential non-party witnesses. The
Bank asserts almost all of the non-party witnesses reside in Colorado, and none of
them are within this Court’s subpoena power. The Bank further contends three of
the potential witnesses are no longer employed by the Bank, and are therefore,
unlikely to agree to attend trial voluntarily.
“The availability of witnesses is obviously an important factor to be
considered in determining the propriety of a discretionary transfer.” Anderson, 634
F.Supp. at 1206. Generally, the moving party’s inability to use compulsory
process to compel the attendance of unwilling witnesses weighs in favor of
transfer. Id. However, the Court should consider whether testimony by deposition
would be adequate, and in doing so, must assess the nature and materiality of the
testimony of the unwilling witnesses. Id. Although a description of the witnesses’
anticipated testimony “is not an indispensable requirement to the granting of a
transfer, the lack of specificity is an important consideration in assessing the
weight to be accorded the defendant’s claim of unavailability.” Id. The Court
should not grant a transfer based on the mere fact the defendant wishes to call
witnesses who reside in a transferee district. Id. at 1207. The party must make a
“sufficient showing that the witnesses will not attend, or will be severely
inconvenienced if litigation proceeds in the transferor forum.” Id.
Here, all but three of the Bank’s 22 potential witnesses are current Bank
employees. Thus, the majority of the witnesses identified by the Bank “will
presumably be willing to testify . . . regardless of inconvenience, precisely because
he or she is a [Bank] employee.” Grady v. CenturyLink Commc’ns, LLC, 2015 U.S.
Dist. LEXIS 158861, *7 (D. Mont. Nov. 24, 2015). The Bank has not provided
any information to the contrary. Further, as for the three former employees, the
Bank has not identified who they are, or provided any specific information about
what their expected testimony will be. Therefore, the Court has no information
upon which to assess the necessity and materiality of their testimony, or to find that
testimony by deposition would not be adequate.
Accordingly, the Court finds this factor weighs slightly against transfer.
Parties’ Relative Contacts with the Forums
The Bank argues it operates solely in Colorado, conducts no business in
Montana, and does not have any branches, offices, or employees in Montana. The
Bank further argues Plaintiffs only own “some” real estate in Montana, but they
own a $1 million dollar home, investment property, and a car in Colorado. (Doc. 4
at 30.) Plaintiffs counter that the Bank has had numerous significant contacts with
Montana simply by virtue of investing nearly $20 million in Plaintiffs’ Montana
ranches. Plaintiffs also claim the Bank’s employees and officers have visited and
stayed at the Montana ranches at least two times a year, every year, since February
Aside from loaning Plaintiffs money for the purchase of the five Montana
ranches, it does not appear the Bank has any significant contacts with Montana. At
the same time, Plaintiffs’ contacts with Colorado certainly do not appear to be
more significant than their contacts with Montana. On balance, the Court finds this
factor weighs marginally in favor of transfer.
State that is Most Familiar with Governing Law
The Bank argues the financing agreements Plaintiffs signed contain choice
of law provisions that provide Colorado law will govern Plaintiffs’ claims. The
Bank further argues that the District of Colorado is more familiar with Colorado
law’s unique facets, including Colorado’s Credit Agreement Statute of Frauds,
C.R.S. § 38-1-124, economic loss rule, and law on jury trial waivers. Plaintiffs
counter that the choice of law provision in the Forbearance Agreement should not
be enforced because the agreement is unconscionable and they are seeking its
rescission. Plaintiffs also assert that because Montana has the most significant
relationship with the land at issue, Montana law should control.
At this point, Plaintiffs have not established that the choice of law provisions
are per se unenforceable. Therefore, at this juncture in the litigation, the Court
declines to resolve whether Colorado or Montana law will ultimately apply. Given
that the agreements call for the application of Colorado law, however, there is a
likelihood that Colorado law will be implicated. Accordingly, this factor weighs in
favor of a transfer.
Relative Congestion of the Forums
Courts may consider the statistics compiled by the Administrative Office of
the United States Courts to assess the relative docket congestion between the
transferee forum and the transferor forum. RD Rod, LLC, 2012 WL 6632185 at
*16-17; Hillerich & Bradsby Co., 2012 WL 2359488 at *3. For the 12-month
period ending in March 2017, the weighted filings per judge in the District of
Montana was 370 cases, and in the District of Colorado it was 535 cases. See
Administrative Office of the United States Courts, U.S. District Courts-Combined
Civil and Criminal Federal Court Management Statistics (March 31, 2017)
(available at http://www.uscourts.gov/statistics/table/na/federal-courtmanagement-statistics/2017/03/31-1.) The statistics also show the average time
from filing to trial was 25.1 months in the District of Montana and 28.2 months in
the District of Colorado. Id. Therefore, this factor weights against transfer.
Length of Time Action Has Been Pending in Transferor Forum
A party’s diligence in seeking to transfer venue is a factor courts should take
into consideration. Anderson, 634 F. Supp. at 1208. Here, the Bank acted
diligently in requesting transfer by filing this motion one week after removing the
action from state court. (Docs. 1, 3.) Further, this action is still in its preliminary
stages, and a scheduling order has not yet been issued. Thus, this factor does not
weigh against transfer.
Ease of Access to Sources of Proof
The Bank argues the original loan agreements and written communications
between the Bank and Plaintiffs are located in Colorado, and it would be unfair
to force the Bank to haul the documents to Montana when Colorado is more
convenient. Plaintiffs counter that the Bank has all of the relevant documents
stored electronically, and its discovery obligation for production of those
documents does not differ between Montana and Colorado.
Due to “technological advances in document storage and retrieval,
transporting documents does not generally create a burden.” Van Slyke v. Capital
One Bank, 503 F.Supp.2d 1353, 1362 (N.D. Cal. 2007). Thus, courts have
recognized that this factor has a diminished importance, except in cases where
there is immovable evidence located in the transferee forum. Hillerich & Bradsby
Co., 2012 WL 2359488 at *4; Grady, 2015 U.S. Dist. LEXIS 158861 at *5. There
is no immovable evidence at issue in this case. Therefore, the Court considers this
The Bank argues Colorado has a more significant interest in the disposition
of this case than Montana does because the Bank loaned Plaintiffs millions of
dollars from Colorado. The Bank characterizes Montana’s interest as being
“derived only from North Dakota residents with second homes in Montana and
Colorado.” (Doc. 4 at 33.) As discussed, Plaintiffs have sufficient contacts with
Montana to warrant deference to their choice of forum. Further, this action relates
to a significant amount of land located with the state of Montana. Thus, Montana
clearly has a local interest in this dispute. Accordingly, the Court finds this factor
weighs against transfer.
As discussed above, the Bank’s absence of a physical presence in Montana,
the fact Colorado law may apply in this case, and the short period of time this
action has been pending in Montana, support the Bank’s motion. On the other
hand, all the other factors are either neutral or weigh against transferring venue.
Because balancing all of the relevant factors does not lead the Court to the firm
conclusion that transfer is appropriate, the Court concludes the Bank has not met
its burden of establishing that venue should be changed.
Accordingly, affording appropriate deference to Plaintiffs’ choice of venue,
and considering all of the foregoing factors, IT IS HEREBY ORDERED that the
Bank of Colorado’s Motion to Transfer Venue is DENIED.
IT IS ORDERED.
DATED this 27th day of November, 2017.
TIMOTHY J. CAVAN
United States Magistrate Judge
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