JPMorgan Chase Bank, N.A. v. Mullen et al
OPINION AND ORDER denying 10 Motion to Change Venue; denying as moot 24 Motion to Strike. Signed by Magistrate Judge Terence P. Kemp on 1/13/2017. (agm)
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF OHIO
JPMorgan Chase Bank, N.A.,
Michel L. Mullen, et al.,
Case No. 2:16-cv-426
JUDGE GEORGE C. SMITH
Magistrate Judge Kemp
OPINION AND ORDER
The Plaintiff, JPMorgan Chase, N.A., brought this action
against Michel Mullen and BJ 400XP, Inc. (“400XP”) to recover the
balance of an alleged unpaid debt.
This matter is now before the
Court on the defendants’ motion to transfer venue and the
plaintiff’s motion to strike.
The motions have been fully
briefed and are ripe for decision. For the following reasons,
both motions will be denied.
This case arises out of the financing of an airplane
400XP bought a Raytheon airplane in 2007 and financed
it through a note and a loan and security agreement with Chase
Mr. Mullen personally guaranteed that obligation.
parties appear to agree that Defendants defaulted on the note as
early as 2009 and never cured that default despite the execution
of a number of “standstill” agreements.
In 2012, the plane was
sold and Chase received the proceeds, but that still left a
sizeable amount payable on the loan.
In the case filed in this
Court, Chase is seeking to recover some $5,596,846.89 plus
Chase filed its complaint here on May 12, 2016.
before that, Defendants filed suit in a Texas state court.
complaint asked for a declaration that the statute of limitations
had run out on Chase’s ability to sue on the note and loan
That suit is now pending in the United States
District Court for the Northern District of Texas, where Chase
Chase has moved to dismiss that case, and its motion
is still pending.
Defendants have asked this Court to transfer
this case to Texas both in order that the two cases may be
consolidated and, in their view, to better serve the interests of
the parties and of justice.
Both the note and the loan agreement contain some language
about forum selection.
Although, as will be discussed later, a
definitive construction of that language is not necessary here,
it may be helpful to recite it in order to place the parties’
venue arguments in context.
Interestingly, the forum selection
and choice of law provisions in these two agreements are not the
The one contained in the note says this:
THE INTERPRETATION, CONSTRUCTION AND VALIDITY OF THIS
NOTE SHALL BE GOVERNED BY THE LAWS OF THE STATE OF
OHIO. LENDER AND BORROWER IRREVOCABLY CONSENT TO THE
JURISDICTION AND VENUE OF ANY STATE OR FEDERAL COURT IN
Doc. 1, Exhibit A.
On the other hand, the loan agreement
THE INTERPRETATION, CONSTRUCTION AND VALIDITY OF THIS
AGREEMENT AND THE NOTE SHALL BE GOVERNED BY THE LAWS OF
THE STATE OF OHIO WITHOUT REFERENCE TO CONFLICT OF LAW
PROVISIONS. ALL PARTIES TO THIS AGREEMENT IRREVOCABLY
CONSENT TO THE JURISDICTION AND VENUE OF ANY STATE OR
FEDERAL COURT IN NEW YORK IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM BROUGHT BY ANY PARTY AGAINST ANY OTHER
PARTY ON ANY MATTER WHATSOEVER ARISING OUT OF, IN
CONNECTION WITH OR IN ANY WAY RELATED TO THE NOTE OR
Doc. 1, Exhibit B.
According to Chase, these provisions mean that Defendants
waived their right to argue that private interests favor a
transfer of venue from Ohio to any other jurisdiction.
Defendants, on the other hand, say that the most they agreed to
was not to argue that venue is improper in Ohio.
They do not
make that argument, but contend that under the general principles
relating to venue and pursuant to 28 U.S.C. §1404, this case
should be transferred to Texas.
Both parties devote a
substantial amount of argument to the precise meaning of the
forum selection clauses, and particularly to what the
significance is of an “irrevocable consent” to venue in a
The general principles relating to a transfer of venue under
28 U.S.C. §1404(a) have been extensively discussed in various
appellate and district court decisions within the Sixth Circuit.
The purposes of transferring a case from one federal district to
another, where venue is proper in each, are to permit access to
proof with greater ease, to allow witnesses to attend a trial, to
enhance enforceability of any judgment rendered, and otherwise to
permit a transfer when to do so would further the goal of a fair
and efficient trial and remove any obstacles thereto.
Rambler Corp. v. American Motors Corp., 254 F.Supp. 137 (W.D.
Providing for a change of venue allows the Court to
prevent unnecessary waste of time, energy and money and to
protect witnesses and the public against unnecessary
inconvenience and expense.
Rowe v. Chrysler Corp., 520 F.Supp.
15 (E.D. Mich. 1981). “However, when balancing those various
factors, the Court does not start with the assumption that the
case should proceed in whichever forum is slightly more
advantageous to the parties or the witnesses.
Rather, it has
long been held that the plaintiff's choice of a forum is entitled
to considerable weight, and, consequently, the party moving for a
change of venue must demonstrate that the interests served by 28
U.S.C. §1404(a) clearly favor a change of venue.”
American Defense Systems, Inc., 2007 WL 1469408, *2 (S.D. Ohio
May 18, 2007), citing Sun Oil Co. v. Lederle, 199 F.2d 423 (6th
Cir. 1952); International Union of Electrical Radio and Machine
Workers v. United Electrical, Radio and Machine Workers of
America, 192 F.2d 847 (6th Cir. 1951); Nicol v. Koscinski, 188
F.2d 537, 537 (6th Cir. 1951); Central Investment Corp. v. Mutual
Leasing Associates, Inc., 523 F.Supp. 74 (S.D. Ohio 1981).
course, although “a plaintiff's choice of forum should be given
weight when deciding whether to grant a motion to change venue,
this factor is not dispositive.” Lewis v. ACB Business Services,
Inc., 135 F.3d 389, 413 (6th Cir. 1998).
Nevertheless, unless it
can be said that, balancing all appropriate factors, plaintiff's
choice of a forum is “clearly ... inconvenient,” a change of
venue should not be ordered.
Lassak, supra, quoting Texas
Eastern Transmission Corp. v. Marine Office-Appleton & Cox Corp.,
579 F.2d 561, 568 (10th Cir. 1978).
Where more than one venue is available in which to try a
case, some inconvenience to one or more parties will exist no
matter which forum is chosen.
Consequently, if a change of venue
serves merely to shift the inconvenience from the defendant to
the plaintiff, a change of venue is improper.
Raymond E. Danto
Associates, Inc. v. Arthur D. Little, Inc., 316 F.Supp. 1350
(E.D. Mich. 1970).
Consistent with that principle, a generalized
assertion by a defendant that witnesses reside in, and documents
are located in, the proposed transferee district, is generally
insufficient to support a change of venue.
Hartford Accident &
Indemnity Co. v. Dalgarno Transportation, Inc., 618 F.Supp 1450
(S.D. Miss. 1985).
Rather, the defendant must show a specific
hardship involved and that witnesses are unwilling to attend a
trial in the chosen forum.
See AMF, Inc. v. Computer Automation,
Inc., 532 F.Supp. 1335 (S.D. Ohio 1982). The Court may also take
into account other factors, including which party is more easily
able to bear the hardship involved in litigating in a distant
forum, where the conduct underlying the plaintiff's claims
occurred, the comparative docket congestion in the districts
under consideration, and the plaintiff's connection, if any, with
the proposed transferee forum.
See Garrett v. Ruth Originals
Corp., 456 F.Supp. 376 (S.D. Ohio 1978); Artisan Development v.
Mountain States Development Corp., 402 F.Supp. 1312 (S.D. Ohio
The traditional analysis may be altered by the parties if
they agree on forum selection language.
There are also some
well-established principles applied in that context.
example, the enforceability of forum-selection clauses is
governed by federal, not state, law.
589 F.3d 821, 828 (6th Cir. 2009).
Wong v. PartyGaming Ltd.,
A forum-selection clause
within an agreement does not generally mean venue in a different
court is improper within the meaning of 28 U.S.C. §1406(a) or
But it does generally mean that when
considering a motion to change venue from the jurisdiction to
which the parties have agreed, a court “should not consider
arguments about the parties’ private interests. When parties
agree to a forum-selection clause, they waive the right to
challenge the preselected forum as inconvenient or less
convenient for themselves or their witnesses, or for their
pursuit of the litigation.
A court accordingly must deem the
private-interest factors to weigh entirely in favor of the
Id. at 582. When considering a motion for
change of venue in light of §1404(a), a forum-selection clause
should be “given controlling weight in all but the most
exceptional cases.” Id., quoting Stewart Organization, Inc. v.
Ricoh Corp., 487 U.S. 22, 33 (Kennedy, J., concurring).
The Court will address the two pending motions in turn,
starting with the motion to change venue.
Motion to Change Venue
Defendants begin their analysis of this issue by arguing
that the forum selection clause in the note is “permissive”
rather than “mandatory” because the language is “positive” - in
other words, it simply permits jurisdiction in Ohio - rather than
“negative,” which, in their view, describes forum selection
clauses that explicitly prohibit the parties from litigating
their disputes in a different court.
According to their reading
of the case law, although a “mandatory” forum selection clause is
a waiver of the right to argue that private interests favor a
change of venue, a “permissive” clause is not, so that in the
latter case, the Court simply goes through the traditional
analysis of venue factors, just as if there were no forum
selection clause at all.
Chase takes a different view,
contending that both types of clauses can constitute a waiver of
the right to object to venue in a chosen forum on grounds that
the private interests of the parties favor litigating the case
Putting aside, for the moment, the fact that if the
Court were to accept Defendants’ position, there would be no
practical difference between “consenting” and “irrevocably
consenting” to the jurisdiction of a particular court - and the
two seem somehow to express different concepts - in this case, it
does not matter, because even if both the private and the public
interests are factored into the analysis, the change of venue
motion lacks merit.
Defendants based their motion on their contention that all
of the transactions described in Chase’s complaint occurred in
the Northern District of Texas, that the defendants and all the
witnesses reside there, and that the other case is still pending
They also point out that the airplane was kept in Texas
and sold there.
On the other hand, Chase points out that its
primary place of business is in Ohio, and it asserts that Chase
employees in its Columbus, Ohio office performed various analyses
of risk and other matters associated with the loan agreement and
the subsequent standstill or forbearance agreements.
As noted above, the relevant private interest factors
include: (1) relative ease of access to sources of proof; (2)
availability of compulsory process to secure attendance of
witnesses; (3) the cost of attendance for willing witnesses; and
(4) all other practical problems that make a trial expeditious
and less expensive.
Estate of Thomson ex rel. Estate of
Rakestraw v. Toyota Motor Corp. Worldwide, 545 F.3d 357, 364 (6th
Cir. 2008), citing Gulf Oil Corp. V. Gilbert, 330 U.S. 501, 508
This court is simply not persuaded that the private interest
factors raised by Defendants are significant enough to support a
change of venue.
If there is any dispute in this case about the
validity of the loan documents or the amounts due, those
documents are as easily accessible in Ohio as they are in Texas;
and, in any event, documents are very portable these days, and it
would be no burden to either party to have to produce documents
for a trial in Ohio.
Whether the airplane was kept in Texas,
Ohio, or even on another continent seems to have no relevance to
whether Defendants owe Chase the money it claims.
Defendants are both Texas residents, but Chase says that its
witnesses would not be employees in its Texas office, but rather
people who work in Ohio.
This is neither a document-heavy nor a
witness-heavy case, and the location of any possible trial does
not appear to place an undue burden on either party.
Consequently, since the private interest factors are neutral,
they do not favor a change of venue.
The public interest factors to consider include (1) court
congestion; (2) the local interest in having localized
controversies decided at home; (3) the avoidance of unnecessary
problems in conflicts of laws; and (4) the unfairness of
burdening citizens in an unrelated forum with jury duty.
See Estate of Thomson, supra, 545 F.3d at 364.
that these factors weigh in favor of venue in Texas, although
This Court disagrees.
Cases may move somewhat
more quickly through the Texas court, but, on the other hand,
the relevant agreements provide that the governing law over this
dispute is Ohio, which weighs in favor of an Ohio venue.
Furthermore, the issue of burdening citizens with jury duty is
not relevant, as the parties have waived a jury trial under the
terms of both the Note and the Loan Agreement.
Defendants make a
separate argument about the need to apply Texas law to the
statute of limitations issue, but that matter is likely to be
litigated in the context of motions practice and does not suggest
that this case should be transferred to Texas just so a Texas
court can resolve that issue - which may well happen anyway if
the Texas case is not dismissed.
Having considered all the above factors, the Court will also
consider the overall interest of justice in the selection of
venue for this matter.
The defendants argue that their first
filed declaratory judgment action supports a transfer for reasons
of judicial economy and consistency.
Generally, the court in
which a suit is first filed should proceed to judgment if a
second filed action involves the same parties and issues.
Certified Restoration Dry Cleaning Network, LLC v. Tenke Corp.,
511 F.3d 535, 552 (6th Cir. 2007).
However, as Chase argues,
filing a declaratory judgment action in Texas has some of the
earmarks of forum shopping, especially since Chase is the more
logical plaintiff in this dispute.
See e.g. PAJ, Inc. V. Yurman
Design, Inc., 1999 WL 68651, *3 (N.D. Tex. Feb. 9, 1999) (“A
plaintiff’s choice of forum should only be given protection where
the plaintiff before the court is the proper plaintiff- not a
manufactured plaintiff through misapplication of a declaratory
judgment.”) (internal citation omitted; 909 Corp. v. Village of
Bolingbrook Police Pension Fund, 741 F.Supp. 1290, 1929 (S.D.
Tex. 1990) (“Anticipatory suits deprive a potential plaintiff of
his choice of forum,” and are “not a proper use of the
declaratory judgment act as [they] provoke a disorderly race to
the courthouse.”) (internal citation omitted); New Orleans Pub.
Serv. Inc. v. Mojoue, 802 F.2d 166, 168 (5th Cir. 1986) (“The
wholesome purposes of declaratory acts would be aborted by its
use of procedural fencing either to secure delay or to choose a
forum”)(internal citation omitted).
These cases are consistent
with the Sixth Circuit’s view on this issue.
See AmSouth Bank v.
Dale, 386 F.3d 763, 788 (6th Cir. 2004) (“Courts take a dim view
of declaratory plaintiffs who file their suits mere days or weeks
before the coercive suits filed by a ‘natural plaintiff’ and who
seem to have done so for the purpose of acquiring a favorable
forum.” “...where a putative defendant files a declaratory action
whose only purpose is to defeat liability in a subsequent
coercive suit, no real value is served by the declaratory
judgment except to guarantee to the declaratory plaintiff her
choice of forum...”).
This factor does not favor Defendants, but
even if the Court viewed the parties’ arguments about this issue
as having equal weight, that still results in the case’s staying
Simply put, there is no good reason why the Court
should transfer this case to Texas.
The Motion to Strike
Generally, a party must include any supporting affidavits to
the court with its motion, unless it can show cause for not doing
This is to “prevent the moving party
from springing new facts on the nonmoving party when it is too
late for that party to contest them.”
Peters v. Lincoln Elec.
Co., 285 F.3d 456, 476 (6th Cir. 2001).
Moreover, Local Rule
7.2(d) of this Court provides, in pertinent part, as follows:
Evidence Supporting Motions - Deadlines. When proof of
facts not already of record is necessary to support or
oppose a motion, all evidence then available shall be
discussed in, and submitted no later than, the primary
memorandum of the party relying upon such evidence.
Evidence used to support a reply memorandum shall be
limited to that needed to rebut the positions argued in
memoranda in opposition.
In seeming contravention of this rule, Defendants attached a
supplemental declaration of Mr. Mullen to their reply, which
Chase now seeks to strike.
In their response, Defendants have
agreed to withdraw paragraphs 3 and 5-8 of the declaration, but
not the rest.
In the Court’s view, it makes no difference to the
outcome of the venue motion whether these remaining paragraphs
are or are not part of the record, so the motion will be denied
For all the reasons discussed above, the defendants’ motion
to transfer venue (Doc. 10) is denied.
The motion to strike
(Doc. 24) is denied as moot.
Motion for Reconsideration
Any party may, within fourteen days after this Order is filed,
file and serve on the opposing party a motion for reconsideration
by a District Judge. 28 U.S.C. § 636(b)(1)(A), Rule 72(a),
Fed.R.Civ.P.; Eastern Division Order No. 14–01, pt. IV(C)(3)(a).
The motion must specifically designate the order or part in
question and the basis for any objection. Responses to objections
are due fourteen days after objections are filed and replies by
the objecting party are due seven days thereafter. The District
Judge, upon consideration of the motion, shall set aside any part
of this Order found to be clearly erroneous or contrary to law.
This order is in full force and effect even if a motion for
reconsideration has been filed unless it is stayed by either the
Magistrate Judge or District Judge. S.D. Ohio L.R. 72.3.
/s/ Terence P. Kemp
United States Magistrate Judge
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