JACKSON HEWITT INC. v. NEW AGE TAXES, INC. et al

Filing 22

OPINION and ORDER denying 13 Defendants' Motion to Dismiss or Transfer. Signed by Judge John Michael Vazquez on 11/17/2022. (dam)

Case 2:22-cv-02352-JMV-LDW Document 22 Filed 11/17/22 Page 1 of 6 PageID: 263

Not for Publication
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY

JACKSON HEWITT INC.,
Plaintiff,

Civil Action No. 22-cv-2352
OPINION & ORDER

v.
NEW AGE TAXES, INC., et al.,
Defendants.
John Michael Vazquez, U.S.D.J.

This matter arose after Plaintiff Jackson Hewitt, Inc. (“Jackson Hewitt”) terminated the
parties’ Franchise Agreements due to alleged material breaches. Jackson Hewitt contends that
Defendants failed to perform numerous post-termination requirements and obligations connected
to Jackson Hewitt’s audit of the franchised business. Presently before the Court is Defendants’
motion to dismiss or, in the alternative, transfer the matter to the Northern District of Illinois. D.E.
13. Plaintiff filed a brief in opposition. D.E. 19.1 The Court reviewed the parties’ submissions

1

The Court refers to Defendants’ brief in support of their motion (D.E. 13-1) as “Defs. Br.” and
Plaintiff’s brief in opposition (D.E. 19) as “Plf. Opp.”. Defendants also filed a reply brief. D.E.
20-1. Defendants, however, filed their reply more than two weeks late, along with a motion
seeking leave to file the untimely brief. D.E. 20. Plaintiff opposes Defendants’ motion, arguing
that the Court should not consider the reply. D.E. 21. Local Civil Rule 7.1(d)(3) governs the time
to file a reply. Outside of an automatic extension, which must comply with the requirements set
forth in L. Civ. R. 7.1(d)(5), “[n]o other extensions of the time limits provided in L. Civ. R.
7.1(d)(2) or (3) shall be permitted without an Order of the Court.” L. Civ. R. 7.1(d)(5).
Defendants’ reply brief is untimely, they do not have consent from their adversary to file late, and
they fail to provide a good reason as to why they were unable to timely file or seek an appropriate
extension under the Local Rules. As a result, the Court denies Defendants’ motion to file the brief
and disregards Defendants’ reply. However, even if the Court were to consider the reply, it would
not change the Court’s analysis.

Case 2:22-cv-02352-JMV-LDW Document 22 Filed 11/17/22 Page 2 of 6 PageID: 264

and decided the motion without oral argument pursuant to Federal Rule of Civil Procedure 78(b)
and Local Civil Rule 78.1(b). For the reasons set forth below, the motion is DENIED.
I. BACKGROUND2 AND PROCEDURAL HISTORY
Jackson Hewitt and Defendant New Age Taxes, Inc. (“New Age”) were parties to two
“Franchise Agreements” that authorized New Age to operate Jackson Hewitt income tax
preparation businesses in Illinois. Compl. ¶¶ 9, 25. Defendants Rubina Nasir and Mohammad
Nasir (the “Individual Defendants”) each executed a “Guaranty,” through which they agreed to
perform New Age’s obligations under the Agreements. Id. ¶¶ 10, 27. The Individual Defendants
are residents of California. Id. ¶¶ 3-4. Jackson Hewitt’s corporate headquarters are in New Jersey.
Id. ¶ 1.
In 2020, Jackson Hewitt alleges that it “received notice of credible allegations of potential
wrongdoing” as to New Age and Rubina Nasir “in the operation of the Franchised Business.” Id.
¶ 32. As a result, Jackson Hewitt exercised its contractual right to inspect and audit the books and
records of New Age. Jackson Hewitt performed a site visit, interviewed at least one employee,
and reviewed materials New Age submitted through its franchise system. Id. ¶ 33. Jackson Hewitt
alleges that the audit provided good cause to substantiate its concerns that Defendants were
engaged in fraudulent conduct with respect to the business; Jackson Hewitt then terminated the
Franchise Agreements. Id. ¶ 34. Jackson Hewitt then demanded that Defendants take certain posttermination action and reimburse Jackson Hewitt for costs associated with the audit, as required

2

The factual background is taken from Plaintiff’s Complaint (D.E. 1) and declaration submitted
in connection with the motion to dismiss (D.E. 19-1). When deciding a motion to dismiss for
improper venue, a court accepts all well-pleaded allegations regarding venue as true, “draws all
reasonable inferences from those allegations in the plaintiffs’ favor, and resolves any factual
conflicts in the plaintiffs’ favor.” Shah v. Centurum, Inc., No. 10-2015, 2011 WL 1527334, at *2
(D.N.J. Apr. 20, 2011) (internal punctuation omitted). A court, however, “may examine facts
outside the complaint to determine whether venue is proper.” Id. (internal quotations omitted).
2

Case 2:22-cv-02352-JMV-LDW Document 22 Filed 11/17/22 Page 3 of 6 PageID: 265

under the Agreements and Guaranties. Jackson Hewitt alleges that Defendants have not complied
with these contractual requirements. Id. ¶¶ 41-43, 52. Additional factual allegations are reviewed
in analysis section below.
In its Complaint, Jackson Hewitt asserts breach of contract claims, alleging that New Age
breached the Agreements, id. ¶ 57, and that the Individual Defendants breached their Guaranties,
id. ¶¶ 60-64. Plaintiff also asserts a claim under the Uniform Fraudulent Conveyances Act, N.J.
Stat. Ann. § 25:2-25, alleging that the Individual Defendants improperly transferred money from
New Age to themselves. Id. ¶¶ 67-79. Defendants subsequently filed the instant motion.
Defendants argue that pursuant to Federal Rule of Civil Procedure 12(b)(3), New Jersey is an
improper venue. In the alternative, the Defendants seek a transfer of the case.
II. ANALYSIS
Federal Civil Rule of Procedure 12(b)(3) permits a court to dismiss a matter that is filed in
an improper venue. Fed. R. Civ. P. 12(b)(3). A district court has broad discretion in determining
whether to dismiss or transfer a case due to improper venue. See Konica Minolta, Inc. v. ICR Co.,
No. 15-1446, 2015 WL 9308252, at *5 (D.N.J. Dec. 22, 2015). But “dismissal is considered to be
a harsh remedy and transfer of venue to another district court in which the action could originally
have been brought[ ] is . . . preferred.” Id. (quoting NCR Credit Corp. v. Ye Seekers Horizon, Inc.,
17 F. Supp. 2d 317, 319 (D.N.J. 1998)). The “defendant[s] . . . bear the burden of showing
improper venue.” Myers v. Am. Dental Ass’n, 695 F.2d 716, 724-25 (3d Cir. 1982).
Venue is governed exclusively by the relevant federal laws. Atl. Marine Constr. Co., Inc.
v. U.S. Dist. Ct. for the W. Dist. of Tex., 571 U.S. 49, 55 (2013). 28 U.S.C. § 1391(b) provides
that a civil action may be brought in
(1) a judicial district in which any defendant resides, if all
defendants are residents of the State in which the district is located;

3

Case 2:22-cv-02352-JMV-LDW Document 22 Filed 11/17/22 Page 4 of 6 PageID: 266

(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 the 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.
28 U.S.C. § 1391(b)(1)-(3). If a case falls into at least one of the Section 1391(b) categories, venue
is proper. Atl. Marine Constr. Co., Inc., 571 U.S. at 55.
The parties largely focus on Section 1391(b)(2), which, as noted, provides that a case may
be brought in a district where “a substantial part of the events or omissions giving rise to the claim
occurred[.]” 28 U.S.C. § 1391(b)(2). To make this determination, courts look at the nature of the
dispute and “the location of those events or omissions giving rise to the claim.” Bockman v. First
Am. Mktg. Corp., 459 F. App’x 157, 161 (3d Cir. 2012) (quoting Cottman Transmission Sys., Inc.
v. Martino, 36 F.3d 291, 294 (3d Cir. 1994)). “Events or omissions that might only have some
tangential connection with the dispute in litigation are not enough.” Cottman Transmission Sys.,
Inc., 36 F.3d at 294. In addition, with respect to breach of contract claims, courts “may take into
account where the contract was negotiated, executed, performed, and breached.” Weichert Real
Estate Affiliates, Inc. v. CKM16, Inc., No. 17-4824, 2018 WL 652331, at *4 (D.N.J. Jan. 31, 2018)
(quoting Stalwart Cap., LLC v. Warren St. Partners, LLC, No. 11-5249, 2012 WL 1533637, at *4
(D.N.J. Apr. 30, 2012)). The statute, however, “does not require a majority of events to take place”
in a chosen venue. Park Inn Int’l, L.L.C. v. Mody Enters., Inc., 105 F. Supp. 2d 370, 376 (D.N.J.
2000). Consequently, multiple fora may be appropriate venues. “[T]here can be more than one
place in which a ‘substantial part’ of the acts or omissions occurred” and a court is not required to

4

Case 2:22-cv-02352-JMV-LDW Document 22 Filed 11/17/22 Page 5 of 6 PageID: 267

determine “the ‘best’ forum” See Ferratex, Inc. v. U.S. Sewer & Drain, Inc., 121 F. Supp. 3d 432,
438–39 (D.N.J. 2015).
Defendants contend that New Jersey is an improper venue because the relevant events and
conduct occurred in Illinois. See Defs. Br. at 6. Defendants argue that the case concerns a
franchise in Illinois and that the alleged breaches along with the alleged fraudulent transfers also
occurred there.3 Id. at 2. Jackson Hewitt counters that a substantial part of the events in this matter
occurred in New Jersey and provides evidence in support. See Plf. Br. at 3-6; Declaration of Shara
Abrams (“Abrams Decl.). For example, Jackson Hewitt rendered services under the Agreements
from New Jersey, including training and support, Abrams Decl. ¶ 9; Defendants called and emailed
Jackson Hewitt in New Jersey regarding performance under the Agreements, id. ¶ 12; and Jackson
Hewitt directed and conducted a substantial part of the audit from New Jersey, id. ¶ 15. In addition,
Jackson Hewitt executed the Agreements and related documents in New Jersey and performed its
obligations under the Agreements in this state. Id. ¶¶ 8, 10-11. With this evidence, the Court
cannot conclude that conduct in New Jersey is tangential to Plaintiff’s claims. Accordingly, the
Court concludes that Defendants have not sustained their burden of demonstrating that New Jersey
is an inappropriate venue under 28 U.S.C. § 1391(b)(2).4 Defendants’ motion to dismiss pursuant
to Rule 12(b)(3) is denied.

3

Defendants also appear to argue New Jersey is an improper forum because Illinois law applies in
this matter through a rider to the Agreements. Defs. Br. at 4. Although a plaintiff’s choice of
venue may impact a choice of law analysis, the inverse is not true. Rather, whether venue is wrong
is solely governed by federal law, notwithstanding any private contractual agreements. See Atl.
Marine Constr. Co., Inc., 571 U.S. at 55; see also Sanders v. Polaris Indus., Inc., No. 20-1257,
2021 WL 7448731, at *2 (W.D. Tex. July 6, 2021) (“[C]hoice of law is [] not relevant to
determining whether venue is proper.”).

4

Because venue is proper under Section Section 1391(b)(2), the Court does not address
subsections (1) or (3). See Atl. Marine Constr. Co., Inc., 571 U.S. at 55 (explaining that if a case
falls into at least one Section 1391(b) category, venue is proper).
5

Case 2:22-cv-02352-JMV-LDW Document 22 Filed 11/17/22 Page 6 of 6 PageID: 268

Defendants argue, in the alternative, that the matter should be transferred pursuant to 28
U.S.C. § 1406(a). Defs. Br. at 6. Section 1406(a) applies only if the initial, challenged venue is
improper. See Jumara v. State Farm Ins. Co., 55 F.3d 873, 878 (3d Cir. 1995). Because New
Jersey is an appropriate venue, the Court cannot transfer the case under Section 1406(a). See
Weichert Real Est. Affiliates, Inc., 2018 WL 652331, at *3 (explaining that if venue is proper under
Section 1391(b) “then Defendants' motion under Section 1406 must be denied.”).
III. CONCLUSION
For the foregoing reasons, and for good cause shown,
IT IS on this 17th day of November, 2022,
ORDERED that Defendants’ motion to dismiss or transfer, D.E. 13, is DENIED.

______________________________
John Michael Vazquez, U.S.D.J.

6