PACCHIANA v. PACCHIANA
MEMORANDUM OPINION AND RECOMMENDATION OF UNITED STATES MAGISTRATE JUDGE signed by MAG/JUDGE L. PATRICK AULD on 6/7/2021; that Defendant's Motion (Docket Entry 10 ) be DENIED. (Hicks, Samantha)
IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF NORTH CAROLINA
GREGG J. PACCHIANA,
MEMORANDUM OPINION AND RECOMMENDATION
OF UNITED STATES MAGISTRATE JUDGE
Magistrate Judge for a recommendation on “Defendant’s Motion to
Dismiss” (Docket Entry 10) (the “Defendant’s Motion”).
reasons that follow, the Court should deny Defendant’s Motion.
Asserting breach of contract and unjust enrichment, Gregg J.
Pacchiana (the “Plaintiff”) initiated this action against Glenn
Pacchiana (the “Defendant”).
¶¶ 1–3, 42–70.)
(Docket Entry 1 (the “Complaint”),
In particular, the Complaint alleges:
contractual agreement to pay moneys owed by Defendant to Plaintiff
in connection with multiple loans made by Plaintiff to Defendant
and/or services provided by Plaintiff to Defendant.”
(Id., ¶ 1.)
The origins of the dispute date back to 2006, when “Defendant
recommended that Plaintiff and Defendant invest in a company that
would be named T-Bird Partners, LLC (‘T-Bird Partners’)” (id.,
Plaintiff and Defendant planned to form the entity in order
“to purchase two existing golf courses located in Saratoga, New
York, and to develop a new 18-hole golf course with housing, a club
house and a catering hall.”
(Id., ¶ 8.)
Given Defendant’s then-
ongoing divorce and resulting financial situation, Plaintiff loaned
(See id., ¶¶ 10–13.)
In connection with such loan,
Defendant agreed “to . . . pay interest on the principal balance of
the loan at the customary family interest rate, and . . . to pay
Defendant’s divorce settlement was finalized and Defendant was in
a financial position to pay.”
(Id., ¶ 13.)
Plaintiff and Defendant signed the operating agreement for TBird Partners (the “Operating Agreement”) on September 27, 2006,
establishing the entity as a North Carolina limited liability
company based in Chapel Hill.
(Id., ¶¶ 14–15.)
contribution obligations for the T-Bird Partners development due to
Defendant’s financial inability to make any such payments at that
point in time.”
(Id., ¶ 16.)
In exchange for the additional loan,
Defendant agreed to a modification of his original repayment
obligation, insofar as he promised “to pay off the principal
balance of the loan, plus interest via profits once T-Bird Partners
became a success, or in the alternative; . . . if T-Bird Partners
was not successful, to pay off the principal balance of the loan,
plus interest upon demand by Plaintiff.”
(Id., ¶ 17.)
agreement, together with the original loan, constitutes the “T-Bird
“T-Bird Partners ultimately never became a profitable venture
and was administratively dissolved on January 14, 2016.”
“On May 16, 2019, pursuant to the T-Bird Contract,
Plaintiff demanded that Defendant repay the full amount owed on the
T-Bird Contract, which amounted to $339,545.02 in principal plus
interest . . . .”
(Id., ¶ 21.)
After Defendant failed to comply
(id., ¶ 22), Plaintiff and Defendant exchanged email correspondence
in August 2019, at which time “Defendant made a new promise [(the
‘2019 Contract’)] to pay his existing debt to Plaintiff” (id.,
Plaintiff . . . $330,143.49 in order to resolve the dispute
concerning the outstanding debt owed under the T-Bird Contract and
in consideration for Plaintiff’s agreement to attend and provide
valuable services at an upcoming meeting [(the ‘Meeting’)] in New
York on August 28-29, 2019 concerning unrelated family business
matters . . . .”
(Id., ¶ 24.)
The Meeting involved “review [of
the] financial information of Thalle Industries, a company which is
co-owned by  Defendant,  Pla[i]ntiff and their sister for a
possible buy back of her shares in the business by the company.”
(Id., ¶ 25.)
“Defendant . . . expressly agreed to Plaintiff’s
condition that the $330,143.49 amount [would] be paid via check
before Plaintiff’s departure from New York so that it could be
deposited when Plaintiff returned to North Carolina on or around
August 30, 2019.”
(Id., ¶ 30.)
Plaintiff participated in the Meeting (see id., ¶¶ 32–34),
which resulted in “a transaction to Defendant’s benefit in excess
of $15 million” (id., ¶ 34).
After the Meeting, Plaintiff met with
Defendant, who proposed an alternate means of repaying part of the
Plaintiff refused (id., ¶ 38), and Defendant then agreed to “write
[a] personal check for the $330,143.49 amount and . . . overnight
September 2, 2019” (id., ¶ 39).
Plaintiff acceded (id., ¶ 39), but
despite “numerous demands . . ., Defendant failed and refused to
make payment” (id., ¶ 41).
In connection with the foregoing, the Complaint alleges breach
of the 2019 Contract (id., ¶¶ 42–48) and the following claims in
the alternative: breach of the T-Bird Contract as modified in 2019
(id., ¶¶ 49–57), breach of the T-Bird Contract (id., ¶¶ 58–65), and
attached as exhibits to the Complaint copies of the August 2019
email correspondence relating to the 2019 Contract.
Entries 1-1, 1-2.)
Instead of answering the Complaint, Defendant filed a motion
to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(2)
(“Rule 12(b)(2)”), or, alternatively, to transfer this action to
the United States District Court for the Southern District of New
York pursuant to 28 U.S.C. § 1404(a) (“Section 1404(a)”).
Entry 10 at 1–2; see also Docket Entries 10-1 (declaration), 11
existence of personal jurisdiction by executing a North Carolina
forum[-]selection clause” (Docket Entry 15 at 6 (emphasis omitted
and standard capitalization applied)) and attaching as an exhibit
the Operating Agreement containing such clause (see Docket Entry
Defendant’s contacts with North Carolina “warrant the exercise of
specific personal jurisdiction over [him].”
(Docket Entry 15 at
8.) As concerns the alternative request to transfer, Plaintiff has
asserted that the Operating Agreement’s forum-selection clause
likewise defeats such effort and that Defendant has failed to
Plaintiff also tendered a sworn declaration in support of the
(See Docket Entries 19, 20, 20-2, 20-3.)
A. Relevant Standards
jurisdiction under Rule 12(b)(2), “the plaintiff ultimately [must]
prove the existence of a ground for jurisdiction by a preponderance
of the evidence.”
Combs v. Bakker, 886 F.2d 673, 676 (4th Cir.
“If a court considers a pretrial personal jurisdiction
challenge without conducting an evidentiary hearing, though, the
plaintiff need only ‘mak[e] a prima facie showing in support of
[the] assertion of jurisdiction.’” Wolfe Fin. Inc. v. Rodgers, No.
(unpublished) (quoting Universal Leather, LLC v. Koro AR, S.A., 773
F.3d 553, 558 (4th Cir. 2014)).
In deciding whether the plaintiff
has made such showing, “the court must construe all relevant
pleading allegations in the light most favorable to the plaintiff,
assume credibility, and draw the most favorable inferences for the
existence of jurisdiction.”
Combs, 886 F.2d at 676.
pleadings . . ., although the court must continue to draw all
plaintiff,” IHFC Props., LLC v. APA Mktg., 850 F. Supp. 2d 604, 616
jurisdiction over a non-resident defendant if (1) an applicable
state long-arm statute confers jurisdiction and (2) the assertion
Nichols v. G.D. Searle & Co., 991 F.2d 1195, 1199 (4th
[t]he North Carolina Supreme Court has held that [North
Carolina General Statute Section] 1-75.4(1)(d) permits
the exercise of personal jurisdiction over a defendant to
the outer limits allowable under federal due process.
See Dillon v. Numismatic Funding Corp., 291 N.C. 674,
676, 231 S.E.2d 629, 630 (1977) (“[I]t is apparent that
the [North Carolina] General Assembly intended to make
available to the North Carolina courts the full
jurisdictional powers permissible under federal due
process.”); see also Combs, 886 F.2d at 676 n.3 (same).
Universal Leather, 773 F.3d at 558 (footnote omitted) (second and
third sets of brackets in original).
“Accordingly, if a plaintiff
asserts jurisdiction under Section 1-75.4(1)(d), the United States
‘two-prong test merges into the single question whether [the
plaintiff] has made a prima facie showing that [the defendant] had
sufficient contacts with North Carolina to satisfy constitutional
Universal Leather, 773 F.3d at 558–59).1
Turning to due-process requirements,
a court may assert jurisdiction over a non[-]resident
defendant through either of two independent avenues.
First, a court may find specific jurisdiction based on
conduct connected to the suit.
If the defendant’s
contacts with the State are also the basis for the suit,
those contacts may establish specific jurisdiction.
Second, a court may exercise personal jurisdiction under
the theory of general jurisdiction, which requires a more
demanding showing of “continuous and systematic”
activities in the forum state.
Tire Eng’g & Distrib., LLC v. Shandong Linglong Rubber Co., 682
F.3d 292, 302 (4th Cir. 2012) (internal citation and quotation
[the Fourth Circuit] ha[s] synthesized the due[-]process
requirements for asserting specific personal jurisdiction
into a three-prong test: “(1) the extent to which the
defendant purposefully availed itself of the privilege of
conducting activities in the State; (2) whether the
plaintiff[’]s claims arise out of those activities
Plaintiff impliedly invoked Section 1-75.4(1)(d), by
relying on the proposition that “North Carolina’s long-arm statute
is intended to assert personal jurisdiction to the full extent
permitted by the Due Process Clause” (Docket Entry 15 at 9 (quoting
IHFC Props., 850 F. Supp. 2d at 616 (discussing N.C. Gen. Stat.
directed at the State; and (3) whether the exercise of
UMG Recordings, Inc. v. Kurbanov, 963 F.3d 344, 351–52 (4th Cir.
2020) (quoting Consulting Eng’rs Corp. v. Geometric Ltd., 561 F.3d
273, 278 (4th Cir. 2009)).
As concerns the first prong, “purposeful availment,” the Court
weighs the following factors:
(1) whether the defendant maintained offices or agents in
the State; (2) whether the defendant maintained property
in the State; (3) whether the defendant reached into the
State to solicit or initiate business; (4) whether the
defendant deliberately engaged in significant or
long-term business activities in the State; (5) whether
a choice of law clause selects the law of the State;
(6) whether the defendant made in-person contact with a
relationship; (7) whether the relevant contracts required
performance of duties in the State; and (8) the nature,
quality, and extent of the parties’ communications about
the business being transacted.
Sneha Media & Ent., LLC v. Associated Broad. Co. P., 911 F.3d 192,
198-99 (4th Cir. 2018).
Under the second prong, “the defendant’s
contacts with the forum state [must] form the basis of the suit.”
Consulting Eng’rs, 561 F.3d at 278–79.
Finally, factors relevant
to the third prong
include: (1) the burden on the defendant of litigating in
the forum; (2) the interest of the forum state in
adjudicating the dispute; (3) the plaintiff’s interest in
obtaining convenient and effective relief; (4) the shared
interest of the states in obtaining efficient resolution
of disputes; and (5) the interests of the states in
furthering substantive social policies.
Id. at 279.
According to Defendant, neither general nor specific personal
jurisdiction exists under the circumstances.
(See Docket Entry 11
In that regard, Defendant has contended that his status
as a New York domiciliary and his lack of connections with North
Carolina render general jurisdiction inapplicable.
(See id. at
As far as specific jurisdiction, Defendant has argued that
his limited or unrelated business dealings in North Carolina do not
constitute purposeful availment for purposes of this action.
id. at 5–8.)
Relatedly, to the extent Defendant has transacted in
North Carolina at all, he has maintained that such activities do
not form the basis of Plaintiff’s claim.
(See id. at 6–9.)
Defendant, the exercise of personal jurisdiction qualifies as
Carolina would burden Defendant and his witnesses (see id. at
9–11), (ii) North Carolina possesses little interest in this matter
effective relief in New York, where he regularly travels (see id.),
efficient resolution (see id. at 11–12), and (v) “no substantive
policy of either North Carolina or New York . . . would be
furthered by litigating this case in North Carolina” (id. at 12).
In response, Plaintiff has relied on the Operating Agreement,
which contains a North Carolina choice-of-law clause and provides
for arbitration in Durham County, North Carolina in the event of a
“dispute arising out of or in connection with [the Operating]
Agreement or the breach thereof” (Docket Entry 15 at 3 (quoting
Docket Entry 15-1, ¶ 12.6)).
(See id. at 6–8.)
Plaintiff, the Operating Agreement dooms any challenge by Defendant
to personal jurisdiction in this action.
In any event,
Plaintiff has argued that Defendant possesses sufficient minimum
contacts with North Carolina because (i) Defendant possessed an
ownership interest in a North Carolina limited liability company
(ii) Defendant initiated the formation of T-Bird Partners and
discussed the business with Plaintiff while present in North
Plaintiff, which Plaintiff funded from North Carolina bank accounts
(id.), (iv) North Carolina law applies to the dispute, given the
choice-of-law provision in the Operating Agreement (id. at 12–13),
performance in North Carolina (id. at 13).
maintained that this dispute arises from Defendant’s contacts with
North Carolina, including the formation and breach of the T-Bird
Contract, as well as Defendant’s efforts to enlist Plaintiff’s
services at the Meeting.
(See id. at 14–15.)
Plaintiff, the exercise of specific personal jurisdiction passes
constitutional standards because Defendant failed to repay loans
from a North Carolina citizen to capitalize T-Bird Partners (id. at
17–18) and because Defendant “induc[ed] Plaintiff to leave North
Carolina to provide valuable services at the . . . Meeting in
exchange for Defendant’s promise to finally pay off his North
Carolina loans” (id. at 18).
As an initial matter, the Court should decline to conclude
that Defendant waived any objection to personal jurisdiction based
on the forum-selection clause in the Operating Agreement.
clause states, in full, as follows:
This Agreement is made in Durham County, North Carolina
and the rights and obligations of the Members hereunder
shall be interpreted, construed and enforced in
accordance with the laws of the State of North Carolina.
Any dispute arising out of or in connection with this
Agreement or the breach thereof shall be decided by
arbitration to be conducted in Durham County, North
Carolina in accordance with the then prevailing
commercial arbitration rules of the American Arbitration
Association, and judgment thereof may be entered in any
court having jurisdiction thereof.
(Docket Entry 15-1, ¶ 12.6 (emphasis added).)
“[A] valid forum[-]selection clause . . . may act as a waiver
to objections to personal jurisdiction.”
Consulting Eng’rs, 561
F.3d at 281 n.11. However, courts generally have discerned no such
litigate, in a particular forum.
See Krones, Inc. v. Bomatic,
Inc., No. 13–C–935, 2014 WL 4338718, at *6–7 (E.D. Wis. Aug. 29,
“addressing whether an arbitration clause can be construed as
impliedly consenting to personal jurisdiction” before rejecting
such construction); United Fin. Mortg. Corp. v. Bayshores Funding
Corp., 245 F. Supp. 2d 884, 892–93 (N.D. Ill. 2002) (deeming forumselection clause pertaining to arbitration insufficient to confer
personal jurisdiction and collecting cases); see also Traton News,
LLC v. Traton Corp., 528 F. App’x 525, 528 (6th Cir. 2013) (“A
forum[-]selection clause confers personal jurisdiction on a court
over only those disputes that the parties agreed to litigate in
proceeding, and [the Operating Agreement] could have included a
forum[-]selection clause for litigation but did not,” Krones, Inc.,
2014 WL 4338718, at *7.2
Moreover, the Operating Agreement’s
choice-of-law clause selecting North Carolina law (alone, at least)
inclusion of a choice[-]of[-]law clause is one factor that a court
may take into account in determining whether the exercise of
personal jurisdiction is justified, but it is no more than that.”).
Turning to whether Plaintiff has made a prima facie showing of
personal jurisdiction, the Court should conclude that due process
To the extent Defendant has suggested that the forumselection clause operates to “deprive the Court of jurisdiction to
hear [matters within the scope of that clause, to include] this
action” (Docket Entry 19 at 3), the Fourth Circuit has held
otherwise (albeit in an unpublished opinion), see Schwartz v.
Coleman, 833 F.2d 310 (table), 1987 WL 38184, at *2 (4th Cir. Nov.
3, 1987) (unpublished) (“Despite the strong federal policy favoring
arbitration, the Federal Arbitration Act, 9 U.S.C. §§ 1-13, does
not deprive federal courts of otherwise possessed subject[-]matter
jurisdiction over disputes that are subject to binding agreements
to arbitrate, and that may indeed be in arbitration.”).
Plaintiff has not argued that general personal jurisdiction
exists under the circumstances (see Docket Entry 15 at 8–18
(discussing only specific personal jurisdiction)), and Defendant
minimum contacts exist between Defendant and North Carolina based
on Defendant’s initiation of business activity in the forum, to
include Defendant’s promise to repay Plaintiff under the T-Bird
automatically constitute sufficient minimum contacts to support
personal jurisdiction,” Ellicott Mach. Corp. v. John Holland Party,
Ltd., 995 F.2d 474, 478 (4th Cir. 1993), such jurisdiction remains
appropriate here in light of Defendant’s actions before the T-Bird
Contract, his obligations under that agreement, and the nature of
the transaction, see FRS, Inc. v. Carim, LLC, No. 3:05CV521, 2006
WL 1967387, at *4 (W.D.N.C. July 12, 2006) (unpublished) (finding
purposeful availment when litigant received loan, promised to
repay, and conducted marketing activities in relevant forum).
In that regard, Plaintiff has averred that Defendant solicited
liability company, the funding of which occurred, in part, via
loans from Plaintiff’s North Carolina bank accounts.
Entry 15-2, ¶¶ 3–5, 7–9.)
Defendant thus promised to perform
obligations as a part-owner of T-Bird Partners, a company based in
correctly has noted that his domicile in New York forecloses the
exercise of general personal jurisdiction by another forum (see
Docket Entry 11 at 4–5 (citing Pandit v. Pandit, 808 F. App’x 179,
181–84 (4th Cir. 2020))). See also Pandit, 808 F. App’x at 184
(rejecting general personal jurisdiction based on “home away from
home” theory); Reddy v. Buttar, No. 3:18-cv-172, 2019 WL 2106082,
at *4 & n.3 (W.D.N.C. May 14, 2019) (unpublished) (concluding that
domicile constitutes sole basis for asserting general personal
jurisdiction over individual).
Additionally, Plaintiff has sworn that Defendant “made in-person
contact with [Plaintiff] regarding the business relationship,”
Sneha Media & Ent., LLC, 911 F.3d at 198-99, on at least one
occasion (id., ¶ 15) and that, in August 2019, the parties spoke by
telephone twice to discuss Defendant’s plan for repaying his debt
(id., ¶¶ 17, 19).4
Next, considering whether “[P]laintiff’s claims arise out of
the activities [Defendant] directed at the forum,” Consulting
Eng’rs, 561 F.3d at 278, the Court should determine that the
requisite relationship exists.
“[E]ven one isolated contact may
give rise to jurisdiction if that contact is related to the cause
of action and is sufficiently purposeful in its aim at the forum
state,” Occidental Fire & Cas. Co. v. Continental Ill. Nat’l Bank
& Tr. Co., 689 F. Supp. 564, 568 (E.D.N.C. 1988); see also Akeva
L.L.C. v. Mizuno Corp., 199 F. Supp. 2d 336, 339 (M.D.N.C. 2002)
(“Specific jurisdiction can arise out of even a single contact with
the forum state if the claim ‘arises out of’ that contact.”).
Here, Plaintiff’s claims derive from the loans he issued after
business venture based in North Carolina.
Plaintiff has alleged
The Court should decline to rely on the choice-of-law
provision in the Operating Agreement for purposes of personal
jurisdiction, as Plaintiff’s claims stem from the alleged breach of
separate agreements between Plaintiff and Defendant. (See Docket
Entry 1, ¶¶ 10–19 (describing T-Bird Contract); id., ¶¶ 24–41
(referencing 2019 Contract); id., ¶¶ 42–70 (lodging four claims
based on foregoing contracts and omitting any mention of Operating
communications by Defendant, but the promises that Plaintiff has
sought to enforce arise out of those contacts.
Lastly, as concerns the third-prong factors, “such an analysis
inconvenient as to place the defendant at a severe disadvantage in
comparison to his opponent,” CFA Inst. v. Institute of Chartered
Fin. Analysts of India, 551 F.3d 285, 296 (4th Cir. 2009) (internal
quotation marks omitted).
Here, Defendant faces no such “severe
disadvantage” given his relative proximity to North Carolina.
Fallon Luminous Prods. Corp. v. Multi Media Elecs., Inc., 343 F.
Supp. 2d 502, 508 (D.S.C. 2004) (deeming exercise of personal
jurisdiction consistent with due process when plaintiff initiated
lawsuit in South Carolina against defendant based in New York).
Additionally, “[North Carolina] has a paternal interest [in this
action],” Lee v. Walworth Valve Co., 482 F.2d 297, 299 (4th Cir.
1973), because Plaintiff (a North Carolina citizen) has lodged
Plaintiff’s alleged right to repayment from Defendant.5
North Carolina would possess an even stronger interest in
this action if North Carolina law applies, an issue that the
parties have disputed. (See Docket Entry 11 at 15 (“At this point,
it is uncertain which State’s law will apply to this matter.”);
Docket Entry 15 at 16–17 & n.1 (asserting that North Carolina
substantive law governs Plaintiff’s claims).) “[F]ederal courts in
diversity of citizenship cases are governed by the conflict of laws
rules of the courts of the states in which they sit.” Griffin v.
McCoach, 313 U.S. 498, 503 (1941). “Under North Carolina common
law, the rule of lex loci contractus controls. That rule focuses
on the state where the contract was entered into or the state where
Plaintiff likely could obtain relief in New York, where some
purportedly relevant events took place (to include Plaintiff’s
performance of the 2019 Contract and Defendant’s failure to tender
payment in accordance with that agreement), nothing in the record
renders this Court’s exercise of jurisdiction constitutionally
reasonably argue that he could not have anticipated being sued in
North Carolina if he failed to repay business loans provided to him
from a North Carolina resident to capitalize a North Carolina
[limited liability company]” (Docket Entry 15 at 17).
In sum, applying standards applicable at this juncture, the
exercise of specific personal jurisdiction over Defendant by this
Court comports with due-process principles.
A. Relevant Standards
“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
the contract was to be performed.” In re Nantahala Village, Inc.,
976 F.2d 876, 881 n.7 (4th Cir. 1992) (internal citations omitted).
Here, the Court should apply North Carolina choice-of-law
principles because Plaintiff has invoked the Court’s diversity
jurisdiction. (See Docket Entry 1, ¶ 5.)
The record fails to
establish where Plaintiff and Defendant “made” the pertinent
agreements (the T-Bird Contract and the 2019 Contract), but
performance of the T-Bird Contract occurred (or should have
occurred) in North Carolina, whereas the 2019 Contract appears to
bear a closer relationship to New York. In any event, because the
source of governing law does not constitute a determinative factor
in the personal-jurisdiction analysis, the Court need not resolve
such question at this stage.
U.S.C. § 1404(a).
“Upon consideration of [a] motion to transfer
venue, th[e] Court must make two inquiries: (1) whether [the
plaintiff’s] claims might have been brought in the [transferee
court], and (2) whether the interest of justice and the convenience
LG Elecs. v. Advance Creative Comput. Corp., 131 F.
Supp. 2d 804, 809 (E.D. Va. 2001).
“The phrase ‘where it might
have been brought’ in [S]ection 1404(a) refers to a forum where
venue originally would have been proper for the claim and where a
Kotsonis v. Superior Motor Express, 539 F. Supp.
642, 645 (M.D.N.C. 1982).6
To assess convenience of the parties and witnesses, as well as
(1) the plaintiff’s initial choice of forum; (2) relative
ease of access to sources of proof; (3) availability of
compulsory process for attendance of unwilling witnesses,
and the cost of obtaining attendance of willing and
unwilling witnesses; (4) possibility of a view of the
premises, if appropriate; (5) enforceability of a
judgment, if one is obtained; (6) relative advantage and
No party has addressed whether the Southern District of
New York qualifies as a venue where this action “might have been
brought,” Kotsonis, 539 F. Supp. at 645 (quoting 28 U.S.C.
(See Docket Entry 11 at 12–16; Docket Entry 15 at
18–23; Docket Entry 19 at 8–10.) The applicable statute provides,
in relevant part, that “[a] civil action may be brought in . . . a
judicial district in which any defendant resides,” 28 U.S.C.
The Southern District of New York encompasses
Westchester County, 28 U.S.C. § 112(b), where Defendant resides
(Docket Entry 10-1, ¶ 6), thus rendering such venue proper.
Defendant’s averment as to his New York domicile (id.) also renders
him subject to personal jurisdiction in such forum.
obstacles to a fair trial; (7) other practical problems
that make a trial easy, expeditious, and inexpensive;
(8) administrative difficulties of court congestion;
(9 local interest in having localized controversies
settled at home; (10) appropriateness in having a trial
of a diversity case in a forum that is at home with the
state law that must govern the action; and (11) avoidance
of unnecessary problems with conflicts of law.
Speed Trac Techs., Inc. v. Estes Express Lines, Inc., 567 F. Supp.
2d 799, 802–03 (M.D.N.C. 2008) (quoting Plant Genetic Sys., N.V. v.
Ciba Seeds, 933 F. Supp. 519, 527 (M.D.N.C. 1996)).
must prove that the balance of factors favors transfer.
See id. at
Defendant has argued, as an alternative to dismissal, that the
Court should transfer this action to the Southern District of New
York pursuant to Section 1404(a).
(See Docket Entry 11 at 12.)
choice of forum merits less weight when the action bears little
relation to the forum.
(Id. at 13.)
Additionally, according to
Defendant, all of his anticipated witnesses reside in New York,
“beyond the subpoena power of this Court,” (id. at 14).
judgment favors transfer” (id.), that North Carolina possesses
little interest in the operative events (id.), and that other
public-interest factors render New York a more suitable forum (see
id. at 14–16).
Plaintiff has opposed transfer, asserting that the Operating
Agreement’s forum-selection clause defeats such request.
Docket Entry 15 at 18.) Furthermore, Plaintiff has maintained that
appropriateness of transfer, insofar as (i) Plaintiff filed suit in
his home forum, a choice entitled to deference (id. at 19–20),
agreement formed in North Carolina and governed by North Carolina
law whose purpose and effect was to capitalize a North Carolina
[entity with an in-state] principal office” (id. at 20–21).
addition, Plaintiff has identified four potential witnesses that
reside in North Carolina and another who “travels to North Carolina
multiple times a year and would not be inconvenienced if called as
(Id. at 21–22.)
As concerns court congestion and
other practical factors, Plaintiff has argued that the backlog of
cases and impact of the COVID-19 pandemic favor retention and that
transfer would merely shift party and witness inconvenience from
Defendant to Plaintiff.
(Id. at 22.)
Operating Agreement’s forum-selection clause as effecting a waiver
of Defendant’s right to request a Section 1404(a) transfer.
general matter, “[w]hen parties agree to a forum-selection clause,
inconvenient or less convenient for themselves or their witnesses,
or for their pursuit of the litigation.”
Atlantic Marine Constr.
Co. v. United States Dist. Ct., 571 U.S. 49, 64 (2013).
waiver occurs, courts “consider arguments about public-interest
A litigant also may “waive its right to
arbitrate when it initially pursues litigation and then reverses
course and attempts to arbitrate,” Gulf Guar. Life Ins. Co. v.
Connecticut Gen. Life Ins. Co., 304 F.3d 476, 484 (5th Cir. 2002)
(internal quotation marks omitted).
Here, by maintaining that the Operating Agreement’s forumselection clause constitutes a waiver by Defendant, Plaintiff has
implicitly asserted that (i) the Operating Agreement applies to
Plaintiff’s claims,7 and (ii) Plaintiff may decline to arbitrate
but nonetheless elect to enforce only the part of the Operating
Agreement selecting Durham, North Carolina as the arbitration
locale. (See Docket Entry 15 at 18.)
Because Plaintiff has failed
to develop an argument in support of such selective enforcement
(see id.) and has initiated litigation, not arbitration, the Court
should decline to find waiver by Defendant and instead should
consider both the private and public-interest factors under Section
However, based on the below assessment of such factors, the
Court should retain jurisdiction over this action.
The applicability of the Operating Agreement remains
uncertain, especially because (i) Plaintiff has attempted to
enforce separate agreements between Plaintiff and Defendant, and
(ii) T-Bird Partners dissolved and no longer exists.
1. Party Convenience8
“Generally, a plaintiff’s choice of forum is entitled to
substantial weight.” Acterna, L.L.C. v. Adtech, Inc., 129 F. Supp.
2d 936, 938 (E.D. Va. 2001).
Courts should not disturb such choice
Collins v. Straight, Inc., 748 F.2d 916, 921 (4th Cir. 1984)
(internal quotation marks omitted).
However, “[t]he weight given
[to] the plaintiff’s choice varies in proportion to the connection
between the forum and the cause of action.
Thus, a plaintiff’s
choice of its home forum is given more weight than its choice of a
GTE Wireless, Inc. v. Qualcomm, Inc., 71 F. Supp.
2d 517, 519 (E.D. Va. 2001).
Courts also look to whether the
“operative facts have [a] material connection with the chosen
Acterna, 129 F. Supp. 2d at 938.
As a general matter,
“when plaintiffs file suit in their home forum, convenience to
parties rarely, if ever, operates to justify transfer.”
Trs. v. Baylor Heating & Air Conditioning, Inc., 702 F. Supp. 1253,
1259 (E.D. Va. 1988); see also Intranexus, Inc. v. Siemens Med.
Sols. Health Servs. Corp., 227 F. Supp. 2d 581, 585 (E.D. Va. 2002)
Apart from references to availability of witnesses
(addressed in the next subsection), neither party has discussed the
“relative ease of access to sources of proof,” Speed Trac Techs.,
567 F. Supp. 2d at 803, or the “possibility of a view of the
premises,” id., two factors that may affect party convenience.
(See Docket Entry 11 at 12–16; Docket Entry 15 at 18–23; Docket
Entry 19 at 8–10.) Neither consideration carries weight under the
To the extent Plaintiff’s claims depend on any
portability; coordinately, no view of any premises appears
retaining nor of transferring venue.”).
Here, Plaintiff’s initial choice of forum deserves substantial
weight because Plaintiff has chosen his home forum9 and because the
“operative facts,” id., show that North Carolina bears a material
connection to the T-Bird Contract and the 2019 Contract, the bases
for Plaintiff’s claims.
At a minimum, both agreements relate to
Defendant’s debt to Plaintiff arising from the capitalization of a
North Carolina company in which Defendant possessed an ownership
Moreover, because transfer would merely shift burdens
convenience cannot overcome Plaintiff’s initial choice of forum.
2. Witness Convenience
“When considering the ease of access to sources of proof,
courts consider the availability of witnesses and other evidence
IHFC Props., 850 F. Supp. 2d at 623.
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.”
Microtek Int’l, Inc., 250 F. Supp. 2d 627, 636 (E.D. Va. 2003).10
Plaintiff has averred that his residence lies in Orange
County (Docket Entry 15-2, ¶ 2), within the Middle District of
North Carolina, 28 U.S.C. § 113(b).
“Although the moving party bears the ultimate burden of
establishing the propriety of transfer, courts have imposed the
burden of proffering details about witnesses and potential
affidavits or otherwise) . . . whether [a non-resident] witness is
willing to travel to a foreign jurisdiction.”
Educ. Funding, L.L.C. v. Pryor Res., 196 F. Supp. 2d 21, 33 (D.D.C.
“Merely stating that potential witnesses reside beyond a
forum’s subpoena power does little to assist the court in weighing
the convenience of the witness and the necessity of compulsory
Samsung Elecs. Co. v. Rambus Inc., 386 F. Supp. 2d 708,
719 (E.D. Va. 2005).
Here, Defendant has averred that all five of his potential
witnesses reside in New York.
(See Docket Entry 10-1, ¶¶ 10–11.)
potential witnesses, four of whom live in North Carolina.
Docket Entry 15-2, ¶¶ 26–27.)
Of the remaining three individuals
who may testify for Plaintiff (each of whom Defendant also has
Defendant’s father) visits North Carolina frequently, and two
travel to North Carolina occasionally. (See id.) However, because
neither affidavit offers details about the materiality of such
witness testimony, the degree of inconvenience, or any witness’s
willingness to travel to a foreign forum (see id.; Docket Entry 101, ¶¶ 10–11), the Court cannot meaningfully compare the suitability
testimony to non-moving parties who oppose transfer on the ground
of witness inconvenience.” D2L Ltd. v. Blackboard, Inc., 671 F.
Supp. 2d 768, 780 n.17 (D. Md. 2009).
of the two fora on this front.
As a result, this factor remains
3. Interest of Justice11
The “interest of justice” inquiry “encompass[es] those factors
unrelated to witness and party convenience.” Acterna, 129 F. Supp.
2d at 939–40.
As mentioned previously, Defendant has focused on
the “enforceability of a judgment” (Docket Entry 11 at 14), “local
interest” (id.), “court congestion” (id.), source of governing law
specifically, Defendant has asserted that (i) he lacks assets in
North Carolina, such that a court in this forum could not enforce
a judgment against him (id. at 14), (ii) New York possesses an
interest in Defendant’s alleged payment obligation arising from the
Meeting (id.), (iii) court congestion fails to clearly favor either
transfer or retention of this action (id. at 14–15), (iv) the
source of governing law remains undetermined but no complex or
novel legal issues would impede adjudication in either New York or
North Carolina (id. at 15), and (v) a North Carolina trial would
cause Defendant and his witnesses to incur more expenses than would
Plaintiff in a New York trial (id. at 15–16).
Turning first to the enforceability of a potential judgment
against Defendant, Plaintiff has suggested that “it will not be
Neither party has suggested that any “obstacles to a fair
trial,” Speed Trac Techs., 567 F. Supp. 2d at 803, exist in either
forum. (See Docket Entry 11 at 12–16; Docket Entry 15 at 18–23;
Docket Entry 19 at 8–10.) Thus, the Court need not dwell on that
Defendant in Wyoming or New York” (Docket Entry 15 at 21).12
Indeed, “[a] judgment in an action for the recovery of money or
property entered in any . . . district court . . . may be
registered by filing a certified copy of the judgment in any other
district . . . when the judgment has become final by appeal or
expiration of the time for appeal or when ordered by the court that
entered the judgment for good cause shown.”
28 U.S.C. § 1963.
Moreover, “[a] judgment so registered shall have the same effect as
a judgment of the district court of the district where registered
and may be enforced in like manner.”
As a result, Defendant’s
non-specific comments about enforceability provide little if any
support for transfer.
Regarding New York’s interest in this matter, as a general
proposition, “[c]ourts have determined that litigation should take
place in the federal judicial district or division with the closest
relationship to the operative events,” Speed Trac Techs., 567 F.
Supp. 2d at 804.
Although New York bears a closer connection to
some of the more recent events and communications (including the
2019 Contract and the Meeting), Plaintiff’s claims originated in
North Carolina, to the extent that Defendant’s plan to create a
North Carolina entity required a loan from Plaintiff, a North
Defendant has averred to “splitting [his] time” between his
home in New York and Jackson, Wyoming, due to the COVID-19
pandemic. (Docket Entry 10-1, ¶ 6.)
Carolina citizen. Therefore, such consideration supports retaining
considered in weighing the interest of justice, [they] are not
given great force.”
Samsung Elecs. Co., 386 F. Supp. 2d at 723.
Defendant has highlighted statistics reflecting median time from
filing to disposition, caseload per judge, and cases over three
(See Docket Entry 11 at 14–15.)
Only the first of
those factors favors transfer, insofar as cases in the Southern
District of New York boast a median disposition time three months
faster than cases in the Middle District of North Carolina.
id. at 15.)
However, judges in the Southern District of New York
must handle more cases (on a per-judge basis), and thousands of
their cases have remained on those dockets for longer than three
years (as compared to a figure in the hundreds in the Middle
District of North Carolina).
docket conditions afford meager support for Defendant’s transfer
declined to indicate which forum’s substantive law applies.
id. at 15.)
For his part, Plaintiff has maintained that North
Carolina substantive law governs because “the last act to form a
binding contract under all of Plaintiff’s alternative claims for
relief occurred in North Carolina” (Docket Entry 15 at 16).
mentioned in a footnote above, North Carolina choice-of-law rules
apply to this diversity action.
See Griffin v. McCoach, 313 U.S.
questions of contract construction and interpretation are governed
by the law of the state where the contract was made.”
Hawthorne Aviation, Inc. v. TriTech Env’t Health & Safety, Inc.,
402 F. Supp. 2d 609, 617 (M.D.N.C. 2005).
“[T]he place at which
the last act was done by either of the parties essential to a
meeting of the minds determines the place where the contract was
Suitt Constr. Co. v. Seaman’s Bank for Sav., 30 N.C. App.
155, 159, 226 S.E.2d 408, 410 (1976).
“[T]he acceptance by one
party of the other party’s offer is usually the ‘last act’ to
formation of a contract, and courts have generally identified the
location of this acceptance as the location of contract formation.”
State ex rel. Cooper v. Western Sky Fin., LLC, No. 13CVS16487, 2015
WL 5091229, at *8 (N.C. Super. Ct. Aug. 27, 2015) (unpublished).
Here, some uncertainty remains about where the parties “made”
the relevant contracts (i.e., their respective locations at the
time of the “last act” or acceptance).
(See, e.g., Docket Entry
15-2, ¶¶ 7–9 (describing loans without discussing mechanics of
offer and acceptance).)
Plaintiff has averred as to his physical
presence in North Carolina when he loaned the funds under the TBird Contract (id., ¶ 9) and when he purchased his plane ticket for
the Meeting (id., ¶ 21) in connection with the 2019 Contract.
However, such actions may constitute Plaintiff’s performance of his
contractual obligations rather than his acceptance of the same.
See Prentzas v. Prentzas, 260 N.C. 101, 104, 131 S.E.2d 678, 681
(1963) (“Agreements are reached by an offer by one party and an
acceptance by the other.”).
The record further fails to clarify
which party qualifies as promisee and promissor, see Restatement
(Second) of Contracts § 2 (Am. L. Inst. 1981).
In any event, the
Court need not decide the choice-of-law question because, even if
New York substantive law governs all pertinent agreements in this
considerations disfavoring transfer.
Finally, with respect to the relative time and expense of
travel, which Defendant has characterized as “[an]other practical
demonstrate the superior suitability of New York, other than to
connection with the numerous other family business ventures located
in New York and to visit New York-based relatives” (id. at 16).
Requiring Plaintiff to make additional trips to New York for
litigation still constitutes a form of shifting the burden from
Defendant to Plaintiff, which (as discussed in connection with
party convenience) cannot justify transfer under the circumstances.
For the foregoing reasons, Defendant has failed to carry his
burden in support of the transfer request.
action should remain in the Middle District of North Carolina.
specific personal jurisdiction over Defendant consistent with dueprocess principles.
The balance of factors under Section 1404(a)
weighs against transfer, particularly in light of the deference
owed to Plaintiff’s initial choice of forum and the connection
between Plaintiff’s claims and North Carolina.
IT IS THEREFORE RECOMMENDED that Defendant’s Motion (Docket
Entry 10) be DENIED.
/s/ L. Patrick Auld
L. Patrick Auld
United States Magistrate Judge
June 7, 2021
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