Yolo Capital, Inc. v. Normand et al

Filing 20

MEMORANDUM OF DECISION AND ORDER granting Defts' 9 Motion to Transfer Venue, and this action is transferred to the U.S. District Court for the Southern District of Mississippi; denying as moot Defts' 11 Motion to Stay or, in the Alternative, Motion to Extend Deadline to File Answer or Other Responsive Pleading. Signed by District Judge Martin Reidinger on 1/26/2018. (ejb)

THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF NORTH CAROLINA
ASHEVILLE DIVISION
CIVIL CASE NO. 1:17-cv-00180-MR-DLH

YOLO CAPITAL, INC.,

)
)
Plaintiff, )
)
vs.
)
)
)
LOUIS J. NORMAND, JR.,
)
Individually and as trustee for
)
American Success Irrevocable
)
Trust, TRUCK CAPITAL, LLC,
)
COAST MANAGEMENT SYSTEMS,
)
LLC, and GLOBAL
)
TRANSPORTATION REINSURANCE )
CO., LTD.,
)
)
Defendants.
)
________________________________ )

MEMORANDUM OF
DECISION AND ORDER

THIS MATTER is before the Court on the Defendants’ Motion to
Transfer Venue [Doc. 9] and the Defendants’ Motion to Stay or, in the
Alternative, Motion to Extend Deadline to File Answer or Other Responsive
Pleading [Doc. 11].
I.

BACKGROUND
On July 11, 2017, the Plaintiff Yolo Capital, Inc. (“Yolo” or “Plaintiff”)

filed this action against the Defendants Louis J. Normand, Jr. (“Normand”),

individually and as trustee of the American Success Irrevocable Trust
(“ASIT”), Truck Capital, LLC (“Truck Capital”), Coast Management Systems,
LLC (“Coast Management”), and Global Transportation Reinsurance Co.,
Ltd. (“Global Transportation”) (collectively, “Defendants”), alleging that the
Defendants breached a guaranty agreement guaranteeing the performance
of non-party National Truck Funding, LLC (“National Truck”) under a Note
Agreement and related Promissory Note, and seeking to recover amounts
due under the Promissory Note from the date of National Truck’s alleged
default. [Doc. 1].
According to the Complaint, Yolo is a corporation organized under the
laws of the State of Nevada with its principal place of business in Buncombe
County, North Carolina. [Doc. 1 at ¶ 1]. Defendant Normand is a resident
of the State of Louisiana and resides in Mandeville, Louisiana. [Id. at ¶ 2].
He is an entrepreneur who manages various corporate entities engaged in
the business of truck leasing and lending. [Id. at ¶ 9]. Normand is sued
individually and as Trustee of American Success Irrevocable Trust (“ASIT”),
a statutory trust established under the laws of the State of Florida for the
purpose of holding assets for the benefit of Normand’s four children, Matthew
L. Normand, Amanda K. Normand, Thomas C. Normand and Anna Kate
Normand (collectively the “Normand Children”). Upon information and belief,
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Matthew L. Normand resides in the State of Mississippi; Amanda K.
Normand resides in the State of Louisiana; Thomas C. Normand resides in
the State of Louisiana; and Anna Kate Normand resides in the State of
Florida. At all times relevant hereto, Normand has served as the sole Trustee
of ASIT.
According to the Complaint, the other Defendants to this action are
domiciled as follows. Defendants Truck Capital and Coast Management are
both limited liability companies organized under the laws of the State of
Mississippi, with their principal places of business in Gulfport, Mississippi.
Defendant Global is a company organized under the laws of the Turks and
Caicos Islands, with its principal place of business in Gulfport, Mississippi.
Finally, non-party National Truck is a limited liability company organized
under the laws of the State of Nevada with its principal place of business in
Gulfport, Mississippi. [Id. at ¶ 10]. Normand is the Member Manager and
CEO of National Truck. [Id. at ¶ 12; Doc. 1-1 at 2].
Prior to the commencement of this action, on June 25, 2017, National
Truck filed a voluntary petition under Chapter 11 of the Bankruptcy Code in
the United States Bankruptcy Court for the Southern District of Mississippi,
Case No. 17-51243-KMS (the “Chapter 11 Case”), and subsequently listed
the Plaintiff as a creditor who has claims secured by National Truck’s
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property and identified the Defendants as co-debtors on the debt to Plaintiff.
[See Doc. 172].1
The Defendants now move, pursuant to 28 U.S.C. § 1412, to transfer
the venue of this action to the Southern District of Mississippi on the grounds
that this action is a proceeding “arising in or related” to National Truck’s
Chapter 11 case. [Doc. 9]. The Defendants further move to stay this action
pending a resolution of the motion to transfer. [Doc. 11]. The Plaintiff
opposes both motions. [Docs. 13, 14]. Having been fully briefed by the
parties, these motions are ripe for adjudication.
II.

DISCUSSION
The Defendants seek transfer of this action pursuant to 28 U.S.C. §

1412, which provides as follows:
A district court may transfer a case or proceeding
under title 11 to a district court for another district, in
the interest of justice or for the convenience of the
parties.

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As part of these bankruptcy proceedings, National Truck filed an adversary proceeding
against Yolo, seeking an injunction or in the alternative a declaration that the automatic
stay of proceeding against National Truck also applies to Normand, individually and as
trustee of ASIT, such that the instant case cannot be pursued against him during the
pendency of the bankruptcy proceedings. [Adversary Case No. 17-06044-KMS (S.D.
Miss.), Doc. 1]. On September 28, 2017, the bankruptcy court entered an order partially
granting the motion for preliminary injunction and prohibiting Yolo from proceeding in the
present action against Normand individually until January 8, 2018. [Doc. 18].
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28 U.S.C. § 1412.2 Section 1412 applies to the transfer of cases under Title
11 as well as cases “arising under title 11, or arising in or related to cases
under title 11.” 1 Alan N. Resnick & Henry J. Sommer, Collier on Bankruptcy
¶ 4.05[1] (16th ed. 2017). The party seeking transfer has the burden of
showing by a preponderance of the evidence that either the interest of justice
or the convenience of the parties would be served by the requested transfer.
Garlock Sealing Techs., LLC v. Waters & Kraus, LLP, No. 3:14-cv-130, 2015
WL 1022291, at *1 (W.D.N.C. Mar. 9, 2015).
In determining whether a transfer of venue would serve the interest of
justice, the Court may consider a number of factors, including the following:
(a) the economic administration of the bankruptcy
estate; (b) the presumption in favor of trying cases
“related to” a bankruptcy case in the court in which
the bankruptcy is pending; (c) judicial efficiency; (d)
ability to receive a fair trial; (e) the state’s interest in
having local controversies decided within its borders;

The Plaintiff does not dispute that the present action “relates to” National Truck’s
bankruptcy proceeding. Nevertheless, the Plaintiff urges the Court to apply the general
venue transfer statute, 28 U.S.C. § 1404, in lieu of § 1412, in determining whether to
transfer venue in this matter. The Court notes that the Fourth Circuit has not definitively
decided which statute is appropriate to apply to the transfer of a case that is “related to”
a case under Title 11, as this one is. At least two judges in this District, however, have
previously determined that § 1412 should be applied. See Garlock, 2015 WL 1022291,
at *1 n.1; Coffey Creek Assocs. Ltd. P’ship v. Guardian Prot. Servs., Inc., No. 3:09-cv295, 2010 WL 1849023, at *5 (W.D.N.C. May 7, 2010). The Court adopts the reasoning
of Garlock and Coffey Creek here and concludes that the Defendants’ motion to transfer
is governed by § 1412. The Court notes, however, that the outcome would have been
the same if the Court had applied § 1404.
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(f) enforceability of any judgment rendered; and (g)
the plaintiff’s original choice of forum.
Blanton v. IMN Fin. Corp., 260 B.R. 257, 266 (M.D.N.C. 2001) (citation
omitted). Not all of these factors are weighed equally, however, as the most
important of these factors is the economic and efficient administration of the
estate. Hilton Worldwide, Inc. Global Benefits Admin. Comm. v. Caesars
Entm’t Corp., 532 B.R. 259, 274 (E.D. Va. 2015) (citing Dunlap v.
Friedman’s, Inc., 331 B.R. 674, 680 (S.D. W. Va. 2005)).
In the present case, the Court concludes that these factors, on
balance, weigh in favor of transfer. First, transfer to the Southern District of
Mississippi would promote the economic and efficient administration of
National Truck’s bankruptcy estate. In the bankruptcy case, National Truck
already has sought court approval of a sale to raise funds to satisfy certain
debts. The Plaintiff is listed as a secured creditor in the Chapter 11 Case
and has filed a limited objection in which it seeks the application of the
entirety of the proceeds raised as a result of that sale to the debt National
Truck allegedly owes to the Plaintiff rather than any such proceeds being
paid to the bankruptcy estate. At the same time, the Plaintiff has filed this
action seeking relief from the purported guarantors of the debt. Transferring
the case to the Southern District of Mississippi more efficiently permits the
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handling of the claims by common counsel and within the same Court to
promote the most economic and efficient administration of the bankruptcy
estate, particularly in the allocation and distribution of any potential
proceeds. Furthermore, the present action is in its earliest stage, as no
answers have been filed by the Court and no case management plan has
been entered. A transfer at this time would cause little or no duplication of
efforts by the courts or the parties. Given the substantial impact adjudication
of this action would have on the bankruptcy estate as well as the
administrative efficiency promoted by the coordinated resolution of this
action and the Chapter 11 case, the Court concludes that transfer of this
matter to the “home court” where the bankruptcy is pending is in the interest
of justice and further serves judicial efficiency.
As for the remaining factors, the Plaintiff has failed to demonstrate that
it could not get a fair trial in the Southern District of Mississippi or that the
enforceability of any judgment obtained there would be impaired. While a
transfer of venue would contravene the Plaintiff’s original choice of forum,

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the Court concludes that the balance of factors weigh heavily in favor of
transfer. Accordingly, the Defendants’ motion to transfer is granted.3
ORDER
IT IS, THEREFORE, ORDERED that the Defendants’ Motion to
Transfer Venue [Doc. 9] is GRANTED, and this action is transferred to
the United States District Court for the Southern District of Mississippi.
IT IS FURTHER ORDERED that the Defendants’ Motion to Stay or, in
the Alternative, Motion to Extend Deadline to File Answer or Other
Responsive Pleading [Doc. 11] is DENIED AS MOOT.
IT IS SO ORDERED.
Signed: January 26, 2018

Because the Court has concluded that transfer of venue is warranted in the interest of
justice, the Court need not address whether the convenience of the parties would also
warrant transfer.
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