American Earth Solutions, LLC v. Peacock et al

Filing 24

MEMORANDUM AND ORDER: For the reasons discussed herein, the defendants' motion 16 will be denied. Signed by District Judge Aleta A. Trauger on 3/14/14. (DOCKET TEXT SUMMARY ONLY-ATTORNEYS MUST OPEN THE PDF AND READ THE ORDER.)(tmw)

UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF TENNESSEE
NASHVILLE DIVISION
AMERICAN EARTH SOLUTIONS, LLC,

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Plaintiff,
v.
BRIAN JOSHUA PEACOCK and
ECO-TEK, LLC,
Defendants.

Case No. 3:13-cv-1097
Judge Trauger

MEMORANDUM AND ORDER
Pending before the court is a Motion to Transfer for Improper Venue pursuant to
28 U.S.C. § 1404(a) or, in the Alternative, Motion to Dismiss for Improper Venue pursuant to
Rule 12(b)(3) (Docket No. 16) filed by the defendants, Brian Joshua Peacock and Eco-Tek, LLC
(“Peacock” or “defendants”), to which the plaintiff, American Earth Solutions (“AES”), has filed
a Response in opposition (Docket No. 21), and the defendants have filed a Reply (Docket
No. 22). For the reasons discussed herein, the defendants’ motion will be denied.
BACKGROUND
This dispute involves the abrupt and acrimonious end of a business relationship.1
Defendant Brian Peacock is the sole member of defendant Eco-Tek, LLC, a company organized

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Unless otherwise noted, the facts are drawn from the plaintiff’s Complaint (Docket No. 1). In
reviewing a motion to transfer or dismiss for improper venue, “the court may examine facts
outside of the complaint but must draw all reasonable inferences and resolve factual conflicts in

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and principally operating in Frederick County, Maryland. Plaintiff AES is a Tennessee
manufacturing company that specializes in erosion control and highway construction products.
In October 2012, AES retained defendant Peacock as an independent contractor for marketing
and sales consulting in exchange for a monthly fee. It appears that the relationship between AES
and Peacock was based on an oral agreement, and the parties, in affidavits submitted in support
of their briefs, dispute where the agreement was formed. (Docket No. 16, Ex. 2 (Affidavit of
Brian J. Peacock (“Peacock Aff.”); Docket No. 20 (Affidavit of Tyler J. Alkins (“Alkins Aff.”).)
AES alleges that its agreement with Peacock included a clear understanding that Peacock would
not be entitled to any additional remuneration, including commissions or bonuses, beyond his
monthly fee.
In April 2013, a financing company known as Pathway Lending agreed to lend AES
$86,000 for the purpose of allowing AES to acquire two silt fence manufacturing machines. In
mid-April, AES asked Peacock to assist AES in locating two such machines for purchase. On
April 24, 2013, Pathway Lending wired $86,000 to Peacock for the purpose of purchasing the
machines. Sometime shortly after April 24, 2013, AES decided that it would purchase two
machines from an alternate equipment manufacturer and asked Peacock to return the $86,000 to
AES or to Pathway Lending. AES alleges that Peacock refused to return the money, and, since
April 2013, AES has continued to pay interest and costs to service the $86,000 loan without the
benefit and use of the funds.

favor of the plaintiff.” Receiver of the Assets of Mid–Am. Energy, Inc. v. Coffman, 719 F. Supp.
2d 884, 890 (M.D. Tenn. 2010).

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In June 2013, Peacock abandoned his duties as an independent consultant and ceased all
communication with AES. On October 7, 2013, AES filed a Complaint against Peacock and
Eco-Tek, alleging a litany of claims, including embezzlement, conversion, fraudulent
inducement, unjust enrichment, fraudulent misrepresentation, negligent misrepresentation, and
breach of contract. (Docket No. 1.) In its Complaint, AES alleges that, in addition to refusing to
return the $86,000, Peacock has kept commissions and profits from transactions between AES
and its customers in violation of the agreement between Peacock and AES.
On February 3, 2014, Peacock filed the pending motion, requesting a transfer of venue to
the United States District Court for the District of Maryland pursuant to 28 U.S.C. § 1404(a), or,
in the alternative, that the court dismiss the Complaint for improper venue pursuant to Fed. R.
Civ. P. 12(b)(3). The plaintiff opposed the defendants’ motion on February 10, 2014, and also
requested that the court issue an order as to its personal jurisdiction over the defendants. In their
Reply filed on February 13, 2014, the defendants conceded the issue of personal jurisdiction and
reiterated their request for transfer or dismissal.
ANALYSIS
As an initial matter, the defendants appear to have employed the wrong vehicle for their
request that the court transfer this matter to another venue. The defendants premise their request
for transfer exclusively on 28 U.S.C. § 1404(a) and rely solely on their argument that the
plaintiff filed its suit in an improper judicial district. However, Section 1404(a) “operates on the
premise that the plaintiff has properly exercised his venue privilege.” Kerobo v. S.W. Clean
Fuels, Corp., 285 F.3d 531, 539 (6th Cir. 2002) (emphasis added). It is unlike 28 U.S.C. § 1406,
which addresses cases that have been filed in the wrong division or district, because it

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“presupposes that the court has jurisdiction and that the case has been brought in the wrong
forum.” Lafferty v. St. Riel, 495 F.3d 72, 77 (3rd Cir. 2007). It appears that, here, the defendants
intended to move for transfer pursuant to Section 1406. Accordingly, the court shall construe the
pending motion as a request for transfer pursuant to Section 1406(a), or, in the alternative, to
dismiss the Complaint for improper venue pursuant to Fed. R. Civ. P. 12(b)(3). Because both of
the defendants’ requests are premised upon a finding of improper venue, the court begins its
analysis with that inquiry.
I.

Improper Venue under 28 U.S.C. § 1391
“The question—whether venue is ‘wrong’ or ‘improper’—is generally governed by 28
U.S.C. § 1391.” Atl. Marine Constr. Co., Inc. v. U.S. Dist. Court for W. Dist. of Texas, 134 S.
Ct. 568, 577 (2013). The burden of establishing venue falls on the plaintiff. See 14D Charles
Alan Wright, et al., Federal Practice and Procedure, § 3826 (3d ed. 2012) (noting that the
position “that probably represents the weight of judicial authority, is that, when an objection has
been raised, the burden is on the plaintiff to establish that the district he or she has chosen is a
proper venue”). Generally, when venue is challenged, the court must determine whether the case
falls within three specific categories set out in Section 1391(b). “If it does, venue is proper; if it
does not, venue is improper, and the case must be dismissed or transferred under Section
1406(a).” Atl. Marine, 134 S. Ct. at 577.
In support of its assertion that venue is proper in this district, AES relies on 28 U.S.C.
§ 1391(b)(2), which states that a diversity action may be brought in “a judicial district in which a
substantial part of the events or omissions giving rise to the claim occurred, or a substantial part

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of the property that is the subject of the action is situated.”2 28 U.S.C. § 1391(b)(2). The Sixth
Circuit has held that this section does not require the court to determine where the most
substantial events giving rise to the claim occurred; rather, venue is proper in “any forum with a
substantial connection to the plaintiff’s claim.” First of Mich. Corp. v. Bramlet, 141 F.3d 260,
263 (6th Cir. 1998). AES cites several facts as evidence that it has met this standard, including
the facts that Peacock transacted business in Tennessee under its arrangement with AES,
Peacock sold AES products manufactured in and shipped from Tennessee, Peacock made several
visits to AES’s offices in Tennessee, Pathway Lending sent the money transfer of $86,000 from
its location in Tennessee to Peacock, and the financial harm incurred by AES occurred in
Tennessee.
In the defendants’ pending motion, they argue that venue is improper in this district
because a substantial part of the allegations of the Complaint occurred in Maryland.
Consequently, the defendants submit, Maryland is the “only proper venue” for this matter under
28 U.S.C. § 1391(b)(2). (Docket No. 16, Ex. 1 at 4 (emphasis added).) However, the statute
does not limit proper venue to only one judicial district. Accordingly, that venue would have
been proper in Maryland does not mean that it is also not proper in this district. In diversity of
citizenship cases, courts do not ask which venue is best, but only whether the chosen forum has a
substantial connection to the plaintiff’s claim. Bramlet, 141 F.3d at 263-64. Here, AES has met

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The Complaint states, “Venue is proper in this Court pursuant to 28 USC § 1391(a)(2), in that
Defendants transact business in this District, and a substantial part of the events, acts, and
omissions causing the loss that is the subject of this action occurred in this District.” (Docket
No. 1 ¶ 5.)

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its burden to demonstrate that a substantial connection exists between its claims and this judicial
district. Accordingly, the court finds that the Middle District of Tennessee is an appropriate
venue for this action under Section 1391(b)(2). Because the court has found that venue is proper
in this district, the defendants’ requests for transfer or dismissal pursuant to Section 1406 and
Fed. R. Civ. P. 12(b)(3) will be denied.
CONCLUSION
For these reasons, the defendants’ Motion to Transfer for Improper Venue pursuant to 28
U.S.C. § 1404(a) or, in the Alternative, Motion to Dismiss for Improper Venue pursuant to Rule
12(b)(3) (Docket No. 16) is DENIED.
It is so ORDERED.
_______________________________
ALETA A. TRAUGER
United States District Judge

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