Kaminsky et al v. Equity Bank

Filing 31

OPINION AND ORDER by Judge Terence Kern - Case transferred to District Court of Kansas in Kansas City ; transferring case (terminates case) ; granting 18 Motion to Transfer Case to Other District (lmc, Chambers)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF OKLAHOMA
LINDA J. KAMINSKY;
LAWRENCE S. KAMINSKY;
LINDA J. KAMINSKY AND LAWRENCE
S. KAMINSKY, TRUSTEES OF THE LINDA
J. KAMINSKY REVOCABLE LIVING
TRUST UNDER AGREEMENT DATED
JANUARY 26, 1993, AS AMENDED FROM
TIME TO TIME.
Plaintiffs,
v.
EQUITY BANK,
Defendant.

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Case No. 17-CV-573-TCK-FHM

OPINION AND ORDER
Before the Court is the Motion to Transfer Venue (Doc. 18) filed by Defendant Equity
Bank (the “Bank”) pursuant to 28 U.S.C. § 1404. Plaintiffs Linda J. Kaminsky and Lawrence S.
Kaminksy (the “Kaminskys”) oppose the motion. (Doc. 23).
This lawsuit arises from a dispute over the Bank’s liquidation of a securities account owned
by Linda J. Kaminsky and pledged as collateral for a series of loans made by the bank to limited
liability companies owned by her husband, Lawrence Kaminsky.

Plaintiffs, individually and as

trustees of the Linda J. Kaminsky Revocable Living Trust Under Agreement Dated January 26,
1993, as Amended from Time to Time (the “Trust”), filed a 61-page Complaint alleging claims
for breach of fiduciary duty, violation of the Equal Credit Opportunity Act (“ECOA”), restitution,

and declaratory judgment. (Doc. 2). The Court has subject matter jurisdiction of this case pursuant
to 28 U.S.C. § 1331.
I. Allegations of the Complaint
The Complaint alleges that the Kaminskys are residents of Olathe in Johnson County,
Kansas, and are Trustees for the Trust, which was established under agreement dated January 26,
1993. Id., ¶¶ 1-3. Linda Kaminsky is the settlor and sole lifetime beneficiary of the Trust, and she
and her husband Larry Kaminsky are co-trustees of the Trust. Id., ¶17.
Larry Kaminsky is a member of ACI Concrete Placement of Kansas; ACI Concrete
Placement of Western Kansas, LLC, OKK Equipment, LLC; and KOK Holdings, LLC—all of
which are limited liability companies organized and existing under the laws of Kansas; ACI
Concrete Placement of Lincoln, LLC, which is a limited liability company organized and existing
under the laws of Nebraska; and ACI Concrete Placement of Oklahoma, LLC, which is a limited
liability company organized and existing under the laws of Oklahoma. Id., ¶¶ 4-10. Larry
Kaminsky is the majority owner of ACI of Lincoln and ACI of Oklahoma (collectively, the “AI
Entities”). Id., ¶15. Linda Kaminsky is Larry Kaminsky’s spouse, and is not a member, owner,
partner, director, officer or employee of any of the ACI Entities. Id., ¶16.
On or about February 1, 2016, The Bank and the ACI Entities entered into a Consolidated,
Amended and Restated Loan and Security Agreement (the “Loan Agreement”) Id., ¶20. Under
the terms of the Loan Agreement, The Bank and the ACI Entities executed a Consolidated,
Amended and Restated Promissory Note (the “Revolving Credit Note”), and three Amended and
Restated Promissory Notes in the amounts of $1,200,000 (“Term Note #1”), $5,000,000 (“Term
Note #2), and $3,195,501.05 (“Term Note #3”). Id., ¶¶ 22-24. Five months later, The Bank and
ACI of Kansas entered into a Promissory Note (“the “Demand Note”) in the amount of $301,529.

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Id., ¶ 25. Collectively, the Revolving Credit Note, Term Notes #1-3 and the Demand Note are
referred to as the “ACI Loans.” Id., ¶ 26.
The Complaint alleges that on or about February 1, 2016, as a condition of extending,
continuing and renewing the ACI Loans, the Bank, in violation of the Equal Credit Opportunity
Act (“ECOA”), 15 U.S.C. § 1691(a) and Regulation B, 12 C.F.R. § 1002.7, required Linda
Kaminsky to sign as an additional party applicant a Securities Account Pledge Agreement in which
she pledged the Trust’s interest in securities account number 5Z191704 (“Linda Trust Securities
Account”) to act as a surety and secure the ACI Loans (the “Linda Trust Securities Account Pledge
Agreement”), and a Securities Account Control Agreement, whereby Linda and Larry Kaminsky,
as Trustees of the Linda Trust, granted the Bank control over the Trust Securities Account (the
“Trust Securities Account Control Agreement”). Id., ¶¶28-33, 53-58.
Subsequently, on December 23, 2016, the ACI Entities signed an “Amendment No. 1 to
Consolidated, Amended and Restated Loan and Security Agreement and Other Transaction
Documents” (the “First Amendment to Loan Agreement”), pursuant to which the Bank waived
certain alleged ACI Loans defaults in exchange for additional collateral. Id., ¶ 30. As a condition
for this, the Bank required Linda Kaminsky to sign on as an additional applicant on “Collateral
Assignment,” in which she, as Trustee of the Linda Trust, allegedly agreed to act as a surety and
assigned ownership rights in a Pacific Life Insurance Company Policy No. VP65215390 to the
Bank to secure the ACI Loans (the “Life Insurance Assignment”). Id., ¶31.
On February 17, 2017, the Bank required Linda Kaminsky to sign as an additional party
applicant a Securities Account Pledge Agreement in which they both agreed to act as a surety and
pledge their respective interests in securities account #653-17370 (“Account 370”) to secure the
ACI Loans (the “Larry and Linda Securities Pledge Agreement”), which was in the name of both

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individuals as joint tenants with right of survivorship. Id., ¶ 34. The Bank also required Linda
Kaminsky to sign as an additional party applicant a Pledged Collateral Account Control Agreement
dated February 22, 2017, whereby both plaintiffs allegedly granted the Bank control over Account
370 (the “Larry and Linda Account Control Agreement”). Id., ¶ 35. The Larry and Linda Account
Control Agreement states that neither Linda Kaminsky nor Larry Kaminsky may withdraw assets
from Account 370, and that the Bank may provide instructions to transfer, sell, redeem, close open
trades, or otherwise liquidate assets in Account 370 without the Kaminskys’ consent. Id., ¶ 36.
Furthermore, the Loan Agreement states that no amendment shall be effective “except by a written
agreement signed by Debtors and a duly authorized officer of Secured Party.” Id., ¶ 37. The Third
Amendment to Loan Agreement does not reference the Larry and Linda Securities Pledge
Agreement or the Larry and Linda Account Control Agreement. Id., ¶ 38. Nevertheless, the Bank
“grabbed” Account 370 assets purportedly as collateral securing the ACI Loans without first
obtaining the ACI Entities’ written agreement to do so as required by the Loan Agreement. Id., ¶
39.
In its Motion to Transfer Venue, the Bank argues that this case should have been filed in
Kansas, and the “slender thread” connecting this case to Oklahoma is ACI Concrete Placement of
Oklahoma, LLC, which is not a party to this action, but has filed its own Chapter 11 case in the
United States Bankruptcy Court for the District of Kansas, Case No. 17-21772.
II. Applicable Law
Transfer to a different district court where the action might have been brought is governed
by 28 U.S.C. § 1404(a), which provides:
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 or to any district or division to which all parties have consented.”

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The Tenth Circuit has held that this section gives courts discretion “to adjudicate motions
for transfer according to an ‘individualized, case-by-case consideration of convenience and
fairness.’” Chrysler Credit Corp. v. Country Chrysler, Inc., 928 F.2d 1509, 1516 (10th Cir. 1991)
(quoting Stewart Org. Inc. v. Ricoh Corp., 487 U.S. 22, 29 (1988)). The party moving to transfer
a case pursuant to §1404(a) bears the burden of establishing that the existing forum is inconvenient.
Id. at 1515.
The Court must initially decide if the case “might have been brought” in the District of
Kansas before deciding whether transfer is appropriate. Under 28 U.SC. § 1391(b), venue is proper
in a judicial district in which the defendant resides or any judicial district “in which a substantial
part of the events or omissions giving rise to the claim occurred. . . .” The Bank is a Kansas
chartered bank with headquarters in Wichita, the Kaminskys are Kansas residents, and all of the
events giving rise to this action occurred in Kansas. Therefore, the case might have been brought
in Kansas.
The decision whether to transfer a case lies within the sound discretion of the trial court.
Texas Gulf Sulphur, 371 F.2d at 147. “The purpose of § 1404(a) is to avoid wasting time, energy,
and money and, in addition, to safeguard parties, witnesses, and the public against avoidable
inconvenience and expense.” Moore’s Federal Rules Pamphlet § 1404.2[2] (citing Lexecon Inc.
v. Milberg Weiss Bershad Hynes & Lerach et al., 523 U.S. 26 (1998)).
The party moving to transfer a case pursuant to §1404(a) bears the burden of establishing
that the existing forum is inconvenient. Id. at 1515. In deciding a motion to transfer, courts are to
consider the following factors:
the plaintiff’s choice of forum; the accessibility of witnesses and other sources of
proof, including the availability of compulsory process to insure attendance of
witnesses; the cost of making the necessary proof; questions as to the enforceability
of a judgment if one is obtained; relative advantages and obstacles to a fair trial;
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difficulties that may arise from congested dockets; the possibility of the existence
of questions arising in the area of conflict of laws; the advantage of having a local
court determine questions of local law; and, all other considerations of a practical
nature that make a trial easy, expeditious and economical.
Id. at 1516 (quoting Texas Gulf Sulphur Co. v. Ritter, 371 F.2d 145, 147 (10th Cir. 1967)).
III. Analysis
A. Plaintiffs’ Choice of Forum
“[U]nless the balance is strongly in favor of the movant[,] the plaintiff’s choice of forum
should rarely be disturbed.” Employers Mut. Cas. Co., supra. However, the plaintiff’s choice of
forum receives less deference if the plaintiff does not reside in the district. Id. at 1168 (citations
omitted). Additionally, courts “accord little weight to a plaintiff’s choice of forum ‘where the facts
giving rise to the lawsuit have no material relation or significant connection to the plaintiff’s
chosen forum.’” Id. (citing Cook v. Atchison, Topeka &Santa Fe Ty. Co., 816 F. Supp. 667, 669
(D. Kan. 1993).
Plaintiffs do not reside in this district, and the Court is not persuaded by the Kaminskys’
argument that the lawsuit has a “material relationship” to this forum because of ACI of Oklahoma’s
location in Tulsa. ACI of Oklahoma is not even a party to this case. Instead, it is one of the many
ACI entities—most of which are located in Kansas—that received loans, and the loans themselves
are not the focus of the lawsuit. At issue in this action, instead, is the enforceability of the
Kaminskys’ pledges of collateral. 1

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In their Sur-Reply Memorandum (Doc 30), the Kaminskys admit that the driving force
for their decision to file suit in the Northern District of Oklahoma is an unpublished decision in
Citgo Petroleum Corp. v. Bulk Petroleum Corp., Case No. 08-CV-654-TCK, 2010 WL 3931496
(N.D. Okla. Oct. 5, 2010). There, the Court held that the Regulation B’s definition of “applicant,”
which expressly includes guarantors, is entitled to administrative deference. Id. at **7-9. The
Kaminskys acknowledge that the decision is nonbinding, but state that Citgo would be more
persuasive in the Northern District of Oklahoma before this judge than it would be in the District
of Kansas. (Doc. 30 at 10). However, the Supreme Court has held that a transferee forum must
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None of the parties in this case reside in Oklahoma. The Kaminskys live in Olathe, Kansas,
and the Bank is a Kansas Chartered Bank with headquarters located in Wichita, Kansas.

The

Complaint sets forth no facts indicating that any events giving rise to this lawsuit occurred in
Oklahoma. Rather, all of the relevant events occurred in Kansas. Therefore, the Court accords
little weight to the Kaminskys’ choice of forum.
B. The Accessibility of Witnesses and Other Sources of Proof
The witnesses—including the Kaminskys and the bank employees—are all located in
Kansas, as are documents in the Bank’s loan file and documents in the hands of relevant third
parties, such as the Kaminskys’ securities account brokers, who are located in Kansas and the
greater Kansas City metro area. All of the likely witnesses would be subject to the subpoena power
of the District of Kansas. In contrast, this court may be limited in its ability to compel compliance
or attendance of third party witnesses, because Wichita and Olathe, Kansas, and Kansas City,
Missouri, are all more than 100 miles from Tulsa, Oklahoma. Accordingly, the Court concludes
this factor weighs in favor of transfer.
C. The Cost of Making the Necessary Proof
If the case were to stay in the Northern District of Oklahoma, the cost of making the
necessary proof would increase for both the Bank and the Kaminskys, as both sides would be
required to have local counsel, to incur extra expenses for time and travel for hearings and/or trial.
Therefore, the Court finds that this factor weighs in favor of transfer.

apply the law of the transferor court, regardless of who initiates the transfer. Ferens v. John Deer
Co., 494 U.S. 516, 523 (1990). Moreover, in F.D.I.C. v. Medmark, Inc., 897 F. Supp. 511, 514
(D. Kan. 1995), the District Court of Kansas—like the Northern District of Oklahoma, in Citgo—
held that a plaintiff could use the alleged violation of ECOA defensively to obtain relief from her
obligation under a guaranty. Accordingly, there is authority in the District of Kansas supporting
the Kaminskys’ position.
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D. Difficulty Arising From Congested Dockets
Plaintiffs correctly point out that the number of pending cases per judge and the median
time from filing to disposition of cases is higher in the District of Kansas than in the Northern
District of Oklahoma. Specifically, in the 12 months ending December 31, 2017, the Northern
District of Oklahoma had 239 pending cases per judge and a median time of 10 months from filing
to disposition. (Doc. 23-5). In comparison, the number of pending cases per judge in the District
of Kansas 461 cases per judge for the District of Kansas, and a median time of 18.7 months from
filing to disposition. (Doc. 23-4). This factor weighs against transfer.
E. The Possibility of the Existence of Questions Arising in the Area of
Conflict of Laws
In addition to EOCA claims, the Kaminskys assert common law claims for breach of
fiduciary duty, restitution and declaratory judgment. Although the Court questions whether
restitution and declaratory judgment are truly claims, as opposed to remedies, the breach of
fiduciary duty claim would clearly be governed by Kansas law. This factor weighs in favor of
transfer.
F. The Advantage of Having a Local Court Determine Questions of Local Law.
To the extent the Kaminskys assert common law claims, it would be preferable for the case
to be litigated in Kansas, since the events giving rise to this suit occurred in Kansas. Employers
Mut. Cas. Co., supra.
In summary, two factors—that plaintiffs chose this forum and that the Northern District of
Oklahoma has less civil case congestion than the District of Kansas—weigh in favor of transfer.
However, the Court accords little weight to the Plaintiffs’ choice of forum, as the allegations of
the Complaint have no material relation or significant connection to this forum. The remaining

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relevant factors—the accessibility of witnesses and other sources of proof, including the
availability of compulsory process to insure attendance of witnesses, the cost of making the
necessary proof; the possibility of the existence of questions arising in the area of conflict of laws,
and the advantage of having a local court determine questions of local law—all weigh in favor of
transfer.
IV. Conclusion
Based on its analysis of the relevant factors governing motions to transfer, the Court
concludes that this case should be transferred to the District of Kansas in Kansas City, where the
Kaminskys and many of the Banks’ witnesses are located.
Accordingly, Equity Bank’s Motion to Transfer Venue (Doc. 18) is hereby granted, and
the Court orders that this case be transferred to the Federal District Court of Kansas in Kansas
City.
Entered this 16th day of November, 2018.

_________________________________
TERENCE C. KERN
United States District Judge

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