Vekash Holdings, LLC v. Granite Falls Partners, LLC et al
Filing
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MEMORANDUM AND ORDER granting 4 Motion to Change Venue to the Southern District of Indiana. Signed by Magistrate Judge David S. Cayer on 12/14/2011. (tmg)
IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF NORTH CAROLINA
CHARLOTTE DIVISION
CASE NO.: 3:11-CV-508-FDW-DSC
VEKASH HOLDINGS II, LLC,
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Plaintiff,
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vs.
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GRANITE FALLS PARTNERS, LLC,
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LAUTH PROPERTY GROUP, LLC, and
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CHICAGO TITLE INSURANCE COMPANY, )
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Defendants.
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__________________________________________)
MEMORANDUM AND ORDER
THIS MATTER is before the Court on Defendants Granite Falls Partners, LLC and Lauth
Property Group, LLC’s “Motion to Transfer Venue,” Doc. 4, filed November 8, 2011, and the
parties’ associated briefs and exhibits, Docs. 5, 7, and 11.
This matter was referred to the undersigned Magistrate Judge pursuant to 28 U.S.C. §
636(b)(1)(B), and this Motion is now ripe for the Court’s consideration.
Having fully considered the arguments, the record, and the applicable authority, the Court
grants Defendants’ Motion to Transfer Venue, and transfers this matter to the Southern District of
Indiana.
I. FACTUAL AND PROCEDURAL HISTORY
This is an action for breach of contract, conversion, breach of fiduciary duty, and unfair and
deceptive trade practices relating to recovery of an earnest money deposit made pursuant to a
contract for the purchase of real property.
Plaintiff Vekash Holdings II, LLC (“Vekash”) is a North Carolina limited liability company
with its principal place of business in Mecklenburg County, North Carolina. Defendant Granite
Falls Partners, LLC (“Granite Falls”) is an Indiana limited liability company with its principal place
of business in Indianapolis, Indiana. Defendant Lauth Property Group, LLC (“Lauth Property”) is
an Indiana limited liability company with its principal place of business in Carmel, Indiana.
Defendant Chicago Title Insurance Company (“Chicago Title”) is a Nebraska corporation with its
principal place of business in Jacksonville, Florida.
On August 11, 2011, Vekash executed a Purchase and Sale Agreement (the "Agreement")
which was thereafter executed by Granite Falls on August 16, 2011 for the purchase and sale of real
property owned by Granite Falls in Caldwell County, North Carolina. Pursuant to the Agreement,
Vekash deposited $100,000.00 in earnest money with Defendant Chicago Title’s Indianapolis,
Indiana office ("Escrow Agent"). On August 22, 2011, six days after execution of the Agreement,
Vekash sent a letter to Granite Falls seeking to terminate the Agreement and asking for return of the
earnest money.
On September 2, 2011, Granite Falls responded that while they had no intention to close and
had terminated the Agreement, Vekash's purported cancellation was in violation of the Agreement's
terms and therefore, Vekash was not entitled to a return of the earnest money. The earnest money
remains in the possession of the Escrow Agent and the parties dispute who breached the Agreement
and who is entitled to the deposit.
As part of the Agreement, the parties included a forum selection provision which states:
10.5. Governing Law and Venue. This Agreement shall, in all respects, be governed,
construed, applied and enforced in accordance with the law of the state where the
Property is located. Purchaser agrees that any litigation in connection with this
Agreement shall be brought in either the Superior Court of Hamilton County, Indiana
or the United States Federal Court for the Southern District of Indiana.
Doc. 1 at Ex. A.
On September 12, 2011, Vekash commenced the present action in Mecklenburg County
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Superior Court against Defendants. On October 12, 2011, Defendants timely filed a Notice of
Removal to this Court in accordance with 28 U.S.C. § 1446 based upon diversity jurisdiction. On
November 8, 2011, Granite Falls and Lauth Property filed the subject Motion asking the Court to
transfer this action to the Southern District of Indiana pursuant to 28 U.S.C. § 1404(a) and the forum
selection clause in the Agreement.
II. DISCUSSION
Under 28 U.S.C. § 1404(a), a district court may, “[f]or the convenience of parties and
witnesses, in the interest of justice, ... transfer any civil action to any other district or division where
it might have been brought.” This Court has enumerated eleven factors that a court should consider
when deciding whether to transfer a matter pursuant to 28 U.S.C. § 1404(a):
(1) the plaintiff's initial choice of forum; (2) the residence of the parties; (3) the
relative ease of access of proof; (4) the availability of compulsory process for
attendance of witnesses and the costs of obtaining attendance of willing witnesses;
(5) the possibility of a view; (6) the enforceability of a judgment, if obtained; (7) the
relative advantages and obstacles to a fair trial; (8) other practical problems that
make a trial easy, expeditious, and inexpensive; (9) the administrative difficulties of
court congestion; (10) the interest in having localized controversies settled at home
and the appropriateness in having the trial of a diversity case in a forum that is at
home with the state law that must govern the action; and (11) the avoidance of
unnecessary problems with conflict of laws.
Scholl v. Sagon RV Supercenter, LLC, 249 F.R.D.230, 239 (W.D.N.C. 2008) (citations omitted).
Generally, the movant carries a “heavy burden” in establishing that a case should be transferred
pursuant to 28 U.S.C. § 1404(a). Jim Crockett Promotions, Inc. v. Action Media Group, Inc., 751
F.Supp. 93, 95 (W.D.N.C. 1990). However, where a party seeks to transfer venue based upon a
forum selection clause, the burden of proof shifts from the party seeking transfer of venue to the
party opposing transfer. Scholl, 249 F.R.D. at 239. Here, Vekash bears the burden of establishing
why the case should not be transferred to the Southern District of Indiana.
Forum selection clauses are prima facie valid and should be enforced when made in
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arms-length transactions absent some compelling reason to disregard them. See The Bremen v.
Zapata Off-Shore Co., 407 U.S. 1, 9-12 (1972); Allen v. Lloyd's of London, 94 F.3d 923, 928 (4th
Cir.1996). The Fourth Circuit explained that
Choice of forum and law provisions may be found unreasonable if (1) their
formation was induced by fraud or overreaching; (2) the complaining party ‘will for
all practical purposes be deprived of his day in court’ because of the grave
inconvenience or unfairness of the selected forum; (3) the fundamental unfairness
of the chosen law may deprive the plaintiff of a remedy; or (4) their enforcement
would contravene a strong public policy of the forum state.
Allen, 94 F.3d at 928 (citing Carnival Cruise Lines, Inc. v. Shute, 499 U.S. 585, 595 (1991) and The
Bremen, 407 U.S. at 12–13).
The Supreme Court has acknowledged that “a valid forum- selection clause is given
controlling weight in all but the most exceptional cases.” Stewart Organization, Inc. v. Ricoh Corp.,
487 U.S. 22, 33 (Kennedy, J concurring) (citing The Bremen, 407 U.S. at 10). The Fourth Circuit
has held that while a valid forum selection clause does not conclusively establish proper venue, it
is “a significant factor that figures centrally in the district court's calculus.” Brock v. Entre Comp.
Ctrs., Inc., 933 F.2d 1253, 1258 (4th Cir.1991) (quoting Stewart, 487 U.S. at 29). A forum selection
clause may be dispositive if no other factors act to tip the balance in favor of non-enforcement. Id.
Vekash has not shown that the forum selection clause was included through fraud or
overreaching, or that litigation in the Southern District of Indiana will deprive it of its day in court,
or result in fundamental unfairness. However, under the fourth factor, Vekash argues that the forum
selection clause contravenes public policy and is unenforceable in North Carolina pursuant to N.C.
Gen. Stat. §22B-3. Vekash points to the fact that the Agreement provides for North Carolina law
to control in all respects. Vekash argues that North Carolina law applies to the interpretation of the
forum selection clause, rendering it invalid as against public policy.
According to North Carolina law, “[a]ny provision in a contract entered into in North
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Carolina that requires the prosecution of any action or the arbitration of any dispute that arises from
the contract to be instituted or heard in another state is against public policy and is void and
unenforceable.” N.C. Gen.Stat. § 22B–3. However, Plaintiff’s reliance on this statute is misplaced
in light of the Supreme Court's holding in Stewart Organization, Inc., v. Ricoh Corp., 487 U.S.22
(1988).
In Stewart, the Supreme Court held that the validity of a forum selection clause is determined
by federal law. 487 U.S. at 32. The Court found the fact that a forum selection clause violated the
public policy of the forum is just one factor in a multi-factor analyses, not a dispositive one. Id.
Therefore, after Stewart, the fact that the forum selection clause violates the public policy of North
Carolina is not by and of itself sufficient to render the clause unenforceable.
Vekash has not met its “heavy burden” of demonstrating an exceptional circumstance that
would grant them relief from the forum selection clause. See Carnival Cruise Lines, 499 U.S. at 595.
Vekash’s remaining arguments against enforcement of the forum selection clause relate to the
convenience of the parties and witnesses. Vekash also argues that the property is located in North
Carolina, North Carolina law applies, and North Carolina attorneys could best handle the matter.
These arguments fail to carry Plaintiff’s burden of demonstrating exceptional circumstances
warranting non-enforcement of an otherwise valid forum selection clause. Therefore, the forum
selection clause should be enforced.
III. ORDER
NOW, THEREFORE, IT IS ORDERED:
1.
Defendants Granite Falls Partners, LLC and Lauth Property Group, LLC’s “Motion
to Transfer Venue,” Doc. 4, is GRANTED, and this matter is hereby TRANSFERRED to the
Southern District of Indiana.
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2.
The Clerk is directed to send the instant file, including this Memorandum and Order,
to the Clerk of Court for the Southern District of Indiana.
3.
The Clerk is directed to send copies of this Memorandum and Order to counsel for
the parties; and to the Honorable Frank D. Whitney.
SO ORDERED.
Signed: December 14, 2011
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