Ocwen Loan Servicing LLC v. Foodman Hunter & Karres PLLC et al
OPINION AND ORDER granting in part and denying in part 12 Motion to Dismiss for Lack of Jurisdiction and/or transfer venue. This case is transferred to the United States District Court for the Western District of North Carolina. Signed by Honorable Mary G Lewis on 12/18/2013.(prou, )
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF SOUTH CAROLINA
OCWEN LOAN SERVING, LLC,
FOODMAN, HUNTER, & KARRES, PLLC,
AND JAMES SURANE, INDIVIDUALLY,
CA. NO.: 4:13-1118-MGL
OPINION AND ORDER
This matter is before the Court on Defendants Foodman, Hunter, & Karres, PLLC
and James W. Surane’s (collectively “Defendants”) motion to dismiss Plaintiff Owen Loan
Servicing, LLC’s (“Plaintiff”) complaint pursuant to Federal Rule of Civil Procedure 12 (b).
(ECF No. 12). Alternatively, Defendants move for a change of venue to the United States
District Court for the Western District of North Carolina pursuant to 28 U.S.C. § 1404. Id.
Plaintiff opposes Defendants’ motion. Having considered the motion and responses filed,
the arguments of the parties, and the applicable law, the court denies the motion to dismiss
and grants the motion for a change of a venue to the United States District Court for the
Western District of North Carolina.
Plaintiff filed this diversity action against Defendants Foodman, Hunter, & Caraways,
PLLC (“Defendant Foodman”) and James W. Surane (“Defendant Surane”), individually on
April 25, 2013. Plaintiff is a Delaware corporation with its principal place of business in
Pennsylvania. (ECF No. 1 ¶ 1). Defendant Foodman is a professional limited liability
company organized under the laws of the State of North Carolina with its principal place
of business in Charlotte, North Carolina. and Defendant Surane is a resident of North
Carolina. (ECF No. 1 ¶¶ 2,3).
Plaintiff alleges that on August 31, 1999, Dorothea and James Estes (“the Estes”)
executed a mortgage “in favor of ‘Parkway Mortgage a Division of Midland National Life
Insurance Company its Successors or Assigns ATIMA’ securing a note . . . in the amount
of $145,000 and encumbering the property known as 3507 Burris Street, North Myrtle
Beach, South Carolina 29582.” (ECF No. 1 ¶ 7).1 Plaintiff further alleges that “James W.
Surane of Foodman, Surane, Hunter, Presnell, & Karres, PLLC . . . agreed to close the
loan” and that “Surane was provided specific closing instructions . . . which served as an
unintegrated agreement setting forth some of Surane’s most important duties as the closing
agent.” (ECF No. 1 ¶¶ 8, 10). Plaintiff asserts that the closing instructions mandated that
Defendant Surane record all necessary documents and return them to the lender in a timely
manner as well as “provide written evidence that a binding mortgagee’s policy of title
insurance . . . is or will be in force and effect as of the date of closing.” (ECF No. 1, ¶ 11).
The Estes loan was transferred to the Federal Home Loan Mortgage Corporation
(“Freddie Mac”) and is currently serviced by Plaintiff. (ECF No. 1, ¶ 14). The Estes missed
their May 1, 2010, payment and Plaintiff referred the loan to foreclosure. (ECF No. 1 ¶ 15).
On August 6, 2010, Plaintiff’s “foreclosure counsel obtained a title search for the Property,
and the search revealed that the Mortgage was never recorded.” (ECF No. 1, ¶ 16). On
April 25, 2013, Plaintiff filed the instant action seeking damages on state law claims for
The Estes are not a party to this action.
breach of contract, negligence, and professional negligence. (ECF No. 1 ¶¶ 7, 22).
On June 10, 2013, Defendants moved for dismissal pursuant to Federal Rules of
Civil Procedure (“FRCP”) 12(b) for lack of subject matter jurisdiction, lack of personal
jurisdiction, and improper venue. Alternatively, Defendants move pursuant to 28 U.S.C.
§ 1404(a) for a change of venue from this district to the Western District of North Carolina.
The court heard arguments on Defendants’ motion to dismiss on December 9, 2013.
II. LAW AND ANALYSIS
A. Motion to Dismiss for Lack of Personal Jurisdiction pursuant to FRCP 12(b)(2)
Defendants submit that this matter should be dismissed because the court may not
assert personal jurisdiction over them.
When a defendant files a motion to dismiss for lack of personal jurisdiction, the
plaintiff bears the burden of proving that grounds for jurisdiction exist. See In re Celotex
Corp., 124 F.3d 619, 628 (4th Cir.1997). The jurisdictional question “is one for the judge,”
and the plaintiff must “prove grounds for jurisdiction by a preponderance of the evidence.”
Mylan Labs. v. Akzo, N.V., 2 F.3d 56, 60 (4th Cir.1993).
If the existence of jurisdiction turns on disputed factual questions the court
may resolve the challenge on the basis of a separate evidentiary hearing, or
may defer ruling pending receipt at trial of evidence relevant to the
jurisdictional question. But when . . . the court addresses the question on the
basis only of motion papers, supporting legal memoranda and the relevant
allegations of a complaint, the burden on the plaintiff is simply to make a
prima facie showing of a sufficient jurisdictional basis in order to survive the
jurisdictional challenge. In considering a challenge on such a record, 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 v. Bakker, 886 F.2d 673, 676 (4th Cir.1989). Personal jurisdiction over an out-of-
state defendant may be either general or specific.
1. General Jurisdiction
South Carolina Code Annotated § 36–2–802 authorizes general jurisdiction over
persons who do business or maintain a principal place of business in the forum state. See
S.C.Code Ann. § 36–2–802 (2009). As such, general jurisdiction arises from a party’s
continuous and systematic activities in the forum state. Helicopteros Nacionales de
Colombia, S.A. v. Hall, 466 U.S. 408, 415–16 (1984). These activities must be “so
substantial and of such a nature as to justify suit against [the defendants] on causes of
action arising from dealings entirely distinct from those activities.” Int’l Shoe Co. v.
Washington, 326 U.S. 310, 318 (1945). General jurisdiction is proper where the defendant
has purposefully “availed himself of the privilege of conducting business [in the forum
state].” Burger King Corp. v. Rudzewicz, 471 U.S. 462, 476 (1985).
Here, Plaintiff has not set forth a showing of “continuous and systematic” contacts
by Defendants. There is no allegation in the complaint that either Defendant Foodman or
Defendant Surane maintains a principal place of business in South Carolina. Additionally,
at the time of the underlying real estate closing, Defendant Foodman did less than two
percent of its business in South Carolina and Defendant Surane was not licensed in South
Carolina. Therefore, the court may not exercise general jurisdiction over Defendants.
2. Specific Jurisdiction
A court may exercise specific jurisdiction when “the out-of-state defendant engage[s]
in some activity purposely aimed toward the forum state and . . . the cause of action arise[s]
directly from that activity.” ESAB Group, Inc. v. Centricut, LLC, 34 F.Supp.2d 323, 331–32
(D.S.C.1999); see S.C.Code Ann. § 36–2–803. Minimal, isolated, or unsolicited contacts,
however, do not give rise to the required purposeful connection between an out- of-state
defendant and the forum state. Umbro USA, Inc. v. Goner, 825 F.Supp. 738, 741
In determining whether personal jurisdiction exists over a non-resident defendant,
the court must perform a two-step analysis. The court must first determine whether the
South Carolina (forum state) long-arm statute provides a basis for asserting jurisdiction
over the defendant. See Young v. FDIC, 103 F.3d 1180, 1191 (4th Cir.1997). Then, the
court must determine that the exercise of personal jurisdiction does not violate the Due
Process Clause of the Fourteenth Amendment of the United States Constitution. Anita’s
New Mexico Style Mexican Food, Inc. v. Anita’s Mexican Foods Corp., 201 F.3d 314, 317
(4th Cir. 2000). Under South Carolina's long-arm statute, personal jurisdiction may be
based on conduct in South Carolina including, but not limited to, the commission of a
tortious act in whole or in part in South Carolina. See S.C.Code Ann. § 36–2–803. South
Carolina’s long-arm statute has been construed to extend to the outer limits allowed by the
Due Process Clause. Foster v. Arletty 3 Sarl, 278 F.3d 409, 414 (4th Cir.2002). “Because
South Carolina treats its long-arm statute as coextensive with the Due Process Clause, the
sole question becomes whether the exercise of personal jurisdiction would violate due
process.” Cockrell v. Hillerich & Bradsby Co., 363 S.C. 485, 491, 611 S.E.2d 505, 508
The Due Process Clause is satisfied for personal jurisdiction purposes if a defendant
has purposefully availed itself of the privilege of conducting business in the forum state and
the defendant has “certain minimum contacts” with the forum state, such that “maintenance
of the suit does not offend ‘traditional notions of fair play and substantial justice.’” Int’l Shoe
Co. at 316. If a cause of action arises out of or relates to a defendant’s contacts with the
forum state, the court can exercise specific jurisdiction. A defendant has minimum contacts
with a jurisdiction sufficient to subject it to specific jurisdiction in the forum state if “the
defendant’s conduct and connection with the forum State are such that he should
reasonably anticipate being haled into court there.” World–Wide Volkswagen Corp. v.
Woodson, 444 U.S. 286, 297 (1980). Further, “[i]t is well established that a single act can
support jurisdiction if that act has a ‘substantial connection’ with the forum and gives rise
to, or figures prominently in, the cause of action under consideration.” Campbell v.
Johnson & Towers, Inc., 123 F.Supp.2d 329, 335 (D.S.C. 1999).
At the December 9, 2013 hearing, Defendants’ counsel conceded that sufficient
minimum contacts existed such that Defendants were subject to jurisdiction under South
Carolina’s Long Arm Statue. However, Defendants argued that the exercise of such
jurisdiction would violate Defendants’ due process rights by offending traditional notions of
fair play and substantial justice.
In order to determine whether or not the exercise of specific personal jurisdiction
comports with due process, the Fourth Circuit Court of Appeals has set forth a three-part
test in which it considers:
(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 these activities directed at the
(3) whether the exercise of personal jurisdiction would be constitutionally
Consulting Engineers, 562 F.3d at 277-278; ESAB Group Inc. v. Centricut, Inc., 126 F.3d
617,623 (4th Cir. 1997). After reviewing these factors, the court finds that exercising
personal jurisdiction on the basis of specific jurisdiction does not violate Defendants’ due
process rights. First, the closing of the loan at issue in this case required Defendants to
purposefully avail themselves to the privilege of conducting business under the laws of
South Carolina. Further, Defendant Foodman has admitted to providing legal services in
South Carolina during the time period at issue in this matter. Second, Plaintiff’s claims
arise directly out of Defendants’ failure to comply with their contractual and professional
obligations to properly close the loan on property located in South Carolina. Third, the
exercise of personal jurisdiction is constitutionally reasonable under the factors outlined by
the Fourth Circuit Court of Appeals in Consulting Engineers Corporation.
In Consulting Engineers Corporation, the court listed the following factors to
(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.
561 F.3d 273,279 (4th Cir. 2009). Upon review, the court finds that the burden on
Defendants of litigating in South Carolina is minimal. Defendant Foodman admitted it
practices law in South Carolina and the distance for Defendants to travel to South Carolina
to litigate this matter is negligible. Next, South Carolina has an interest in the regulation
of attorneys conduct and competency who undertake to practice in South Carolina. South
Carolina also has an interest in discouraging injuries that occur within the state. Finally,
South Carolina has a substantial interest in cooperating with other states to provide a forum
for efficiently litigating plaintiff's cause of action. Accordingly, the court finds that it is
constitutionally reasonable to exercise personal jurisdiction over Defendants.
B. Motion to Dismiss Pursuant to Federal Rule of Civil Procedure 12(b)(1)
Defendants argue that this court lacks subject-matter jurisdiction over Plaintiff’s
claim pursuant to the South Carolina Door Closing Statute. S.C. Code Annotated § 15-5150 (2005). The South Carolina Door Closing Statute states:
An action against a corporation created by or under the laws of any other
state, government or country may be brought in circuit court:
(1) By any resident of this state for any cause of action; or
(2) By a plaintiff not a resident of this State when the cause of action shall
have arisen or subject of the action shall be situated within the State.
Id. Defendants assert that Plaintiff has not alleged that Defendants committed any act
within the State of South Carolina. Defendants further assert that because Plaintiff is a
non-resident filing an action against non-resident Defendants for alleged negligent actions
that occurred in another state, that the South Carolina Door Closing Statute requires
dismissal of all claims that did not arise in South Carolina.
Plaintiff contends that pursuant to Defendants’ agreement and under South Carolina
law regarding professional closing duties, Defendants were required to take two key steps
in South Carolina—conduct a title search and record the title and the mortgage. Plaintiff’s
assert that Defendants failed to complete these two key steps. Plaintiff argues that
Defendants cannot evade dismissal under South Carolina’s Door Closing Statute based
upon their failure to provide required real estate closing services.
Determining whether or not the South Carolina Door Closing Statute precludes this
court from considering this action depends on a fact-sensitive analysis. Tuttle Dozer Work,
Inc. v. Gyro-Trac (USA), Inc., 463 F. Supp.2d 544, 551 (D.S.C. 2006). “When a contract
is involved, the question for purposes of the South Carolina Door Closing statute is whether
the contract was made or was to be performed in South Carolina”. Id. at 551. In the instant
action, the court is unable to discern from the current record whether or not the South
Carolina Door Closing Statute precludes Plaintiff’s causes of action. As such, the court
declines at this early stage of the proceedings to dismiss this action based on the South
Carolina Door Closing statute. For present purposes, Defendants’ motion to dismiss based
on the South Carolina Door Closing Statute is denied without prejudice. The court next
considers Defendants’ motion to dismiss due to improper venue, or in the alternative to
transfer this case for improper venue.
C. Motion to Dismiss due to Improper Venue Pursuant to Federal Rule of Civil
Defendants move to dismiss this action due to improper venue under Federal Rule
of Civil Procedure 12(b)(3). When a defendant objects to venue under Rule 12(b)(3), the
plaintiff bears the burden of establishing that venue is proper. See Motley Rice, LLC v.
Baldwin & Baldwin, LLP, 518 F.Supp.2d 688 (D.S.C.2007) (plaintiff bears the burden of
establishing venue). A civil action wherein jurisdiction is founded only on diversity of
citizenship may, except as otherwise provided by law, be brought in: (1) a judicial district
where any defendant resides, if all defendants reside in the same State; (2) a judicial
district in which a substantial part of the events or omissions giving rise to the claim
occurred, or a substantial part of property that is the subject of the action is situated; or (3)
a judicial district in which any defendant is subject to personal jurisdiction at the time the
action is commenced, if there is no district in which the action may otherwise be brought.
Defendants argue that venue is improper in South Carolina because Defendants do
not reside in South Carolina and most of the substantial acts giving rise to Plaintiff’s causes
of action did not occur in South Carolina. In the alternative, Defendants ask the court to
transfer this matter to the Western District of North Carolina. Plaintiff asserts that venue
is proper in South Carolina because Defendants failed to take reasonable measures to
properly close the Estes’ loan for property located in South Carolina. Specifically, Plaintiff
argues that Defendants’ failure to file the mortgage and failure to obtain title insurance
caused Plaintiff’s injuries. Plaintiff further argues its injuries and its causes of actions arose
in South Carolina.
After careful consideration and based on the contacts described in connection with
the court’s finding that sufficient minimum contacts exist, the court concludes that a
substantial part of the alleged events or omissions giving rise to Plaintiff’s claims occurred
in South Carolina. Therefore, South Carolina is a proper venue for this lawsuit.
D. Motion under 28 U.S.C. § 1404(a) to Transfer Venue
In the alternative, Defendants ask the court to transfer venue to the Western District
of North Carolina pursuant to 28 U.S.C. § 1404(a) which provides that a case may be
transferred if it is originally filed in a proper venue, but there exists an additional appropriate
venue that would better serve the “interest of justice.” A “district court has broad discretion
to grant or deny a motion to transfer to another district.” Landers v. Dawson Constr. Plant,
Ltd., Nos. 98–2709, 98–2763, 1999 WL 991419, at *2 (4th Cir. Nov. 2, 1999) (per curiam).
“Therefore, a district court’s ruling on a motion to transfer will be reversed only for a clear
abuse of discretion.” Id.
Ordinarily, a plaintiff’s choice of forum will not be disturbed lightly. Sw. Equip., Inc.
v. Stoner & Co., C.A. No. 6:10–1765–HMH, 2010 WL 4484012, at *2 (D.S.C. Nov.1, 2010).
As a result, in considering a change of venue, “a district court is required to weigh the
factors involved and ‘[u]nless the balance is strongly in favor of the defendant, the plaintiff’s
choice of forum should rarely be disturbed.’” Collins v. Straight, Inc., 748 F.2d 916, 921
(4th Cir.1984) (quoting Gulf Oil Corp. v. Gilbert, 330 U.S. 501 (1947)) (alteration in original).
When venue is challenged, the plaintiff has the burden of proving venue is proper. See
Figgie Int'l, Inc. v. Destileria Serralles, Inc., 925 F.Supp. 411, 413 (D.S.C.1996).
In deciding a motion to transfer, the following factors are commonly considered:
(1) the ease of access to the sources of proof; (2) the convenience of the
parties and witnesses; (3) the cost of obtaining the attendance of the
witnesses; (4) the availability of compulsory process; (5) the possibility of a
view by the jury; (6) the interest in having local controversies decided at
home; and (7) the interests of justice.
Sw. Equip., Inc., 2010 WL 4484012, at *4 (citing Landers, Nos. 98–2709, 98–2763, 201
F.3d 436 (unpublished table decision)).
1. Ease of Access to the Sources of Proof
Although access to the sources of proof would not be difficult if this case remained
in South Carolina, all sources of proof are located in North Carolina. Plaintiff filed this
action against Defendants alleging Defendants were negligent in performing a real estate
closing. The basis for this action arises out of legal services performed by Defendants in
North Carolina. Any records for these legal services would be located in North Carolina.
As such the ease of access to the sources of proof favors transferring venue to North
2. Convenience of the Parties and Witnesses
Plaintiff is a Delaware corporation. Plaintiff has not identified any witnesses that will
have to travel. Defendant Surane is a North Carolina resident and Defendant Foodman is
a North Carolina corporation. Thus, their witnesses, if any, are most probably located in
North Carolina. Upon review, the court finds that the convenience of the witnesses favors
In addition to examining the convenience of the witnesses, the court also examines
the convenience of the parties. Plaintiff has chosen to bring this action in South Carolina.
However, Plaintiff does not maintain an office in South Carolina or North Carolina, thus
there is no prejudice to Plaintiff if this matter is transferred to North Carolina. Plaintiff will
be able to get its employees to attend necessary hearings, depositions and trial whether
this matter is held in South Carolina or North Carolina. Additionally, the court notes that
Plaintiff’s counsel is from North Carolina. Thus, it appears more convenient for Plaintiff’s
counsel for this action to be heard in North Carolina. The court recognizes that both parties
may experience some degree of inconvenience regardless of whether the case remains
in South Carolina or is transferred to North Carolina. Therefore, this factor weighs in favor
3. Cost of Obtaining the Attendance of Witnesses
For same reasons the court found that transfer to North Carolina is more convenient
to the parties and witnesses, cost of attendance of the witnesses would likewise favor
4. Availability of Compulsory Process
Regardless of the district in which this matter proceeds, both Plaintiff and
Defendants will be able to get their employees to attend necessary depositions, trial and
hearings. At the present time, neither party has indicated that it has third-party witnesses
who will be required to attend judicial proceedings. As such, the court finds that this factor
weighs in favor of transferring the case.
5. Possibility of a View by a Jury
This factor does not favor one venue over the other. The South Carolina property
that was the subject of the underlying loan is not an issue in the case.
6. Interest of Having Local Controversies decided at Home
The loan that was not recorded and the title insurance that was not obtained was for
property in South Carolina. The court finds that South Carolina has a substantial interest
in presiding over this controversy.
As such this factor does not weigh in favor of
7. Interest of Justice
“Under § 1404(a), the Court must consider the ‘interest of justice’ in determining
whether to transfer venue. The interest of justice encompasses public interest factors
aimed at ‘systemic integrity and fairness.’” Mullins v. Equifax Information Services, LLC, et
al., No. 3:05CV888, 2006 U.S. Dist. LEXIS 24650, at *26, 2006 WL 1214024 (E.D.Va.2006)
(quoting Stewart Org., Inc. v. Ricoh Corp., 487 U.S. 22 (1988)). “Judicial economy and the
avoidance of inconsistent judgments are prominent among the principal elements of
systemic integrity.” Mullins, No. 3:05CV888, 2006 U.S. Dist. LEXIS 24650, at *26, 2006
“When determining whether a fair proceeding requires a transfer of venue, courts
often consider docket congestion, interest in having local controversies decided at home,
knowledge of applicable law, unfairness in burdening forum citizens with jury duty, and
interest in avoiding unnecessary conflicts of law.” Id. In the instant case, the court finds
most of the considerations of the interest of justice to be neutral.
Upon review, the court finds that the balance of factors weighs in favor of
transferring this case to the United States District Court for the Western District of North
Carolina. The court has considered Plaintiff’s choice of venue and that the local interest
factor favors retention of the case in South Carolina. However, in balancing the relative
convenience and fairness of the two districts, the court finds that convenience of the
witnesses and parties as well as costs of obtaining witnesses favor transfer to the Western
District of North Carolina. Accordingly, the court grants Defendants’ motion to transfer
venue to the Western District of North Carolina.
For the foregoing reasons, the court GRANTS IN PART AND DENIES IN PART
Defendants’ motion to dismiss and/or transfer venue. (ECF No. 12). This case is
transferred to the United States District Court for the Western District of North Carolina.
IT IS SO ORDERED.
/s/Mary G. Lewis
United States District Judge
Florence, South Carolina
December 18, 2013
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