Jerger v. D&M Leasing Dallas et al

Filing 20

MEMORANDUM OPINION AND ORDER. It is therefore ORDERED that Defendants' Rule 12(b)(3) Motion to Dismiss for Improper Venue (Dkt. 6 , Dkt. 8 ) is GRANTED as set forth herein. It is hereby ORDERED that this case be transferred to the Northern District of Texas, Dallas Division. Signed by District Judge Amos L. Mazzant, III on 7/28/2020. (baf, )

Case 4:20-cv-00309-ALM Document 20 Filed 07/28/20 Page 1 of 10 PageID #: 117

United States District Court
EASTERN DISTRICT OF TEXAS
SHERMAN DIVISION

CHARLES JERGER,
Plaintiff,
v.
D&M LEASING DALLAS AND ALLY
FINANCIAL INC.,
Defendants.

§
§
§
§
§
§
§
§
§
§

Civil Action No. 4:20-cv-00309
Judge Mazzant

MEMORANDUM OPINION AND ORDER
Pending before the Court is Defendant D&M Leasing Dallas’ Rule 12(b)(3) Motion to
Dismiss for Improper Venue (Dkt. #6) and Defendant Ally Financial Inc.’s Rule 12(b)(3) Motion
to Dismiss for Improper Venue and Adoption and Joinder of Defendant D&M Leasing Dallas’
Rule 12 (b)(3) Motion to Dismiss for Improper Venue (Dkt. #8). Having considered the motion
and the relevant pleadings, the Court finds that Defendants’ motion should be GRANTED.
BACKGROUND
I.

Factual Background
In this action, Plaintiff Charles Jerger has filed suit against Defendants D&M Leasing

Dallas and Ally Financial Inc. Plaintiff’s complaint seeks damages from Defendants for violation
of the Truth in Lending Act1 (“TILA”); fraudulent and negligent misrepresentation under Texas
common law principles; violation of the Texas Deceptive Trade Practices Act2 (“DTPA”); and
breach of express warranty under Texas common law principles.3

1

15 U.S.C. § 1601.
Tex. Bus. & Com. Code § 17.46.
3
Plaintiff seeks damages for breach of express warranty permitted under 15 U.S.C. § 2308.
2

Case 4:20-cv-00309-ALM Document 20 Filed 07/28/20 Page 2 of 10 PageID #: 118

Plaintiff is a natural person residing in Richardson, Texas.4 D&M Leasing’s Dallas office
is one of four offices of D&M Leasing, an automobile leasing company registered with the state
of Texas.5 Defendant Ally Financial, Inc. is a loan and finance company incorporated in Delaware.
Ally Financial, Inc. has an office in Dallas, but—in the current controversy—they operated
digitally through a D&M Leasing agent at D&M Leasing’s Dallas office.
The five claimed violations stem from a single series of events. In 2014, Plaintiff leased a
2011 Lexus from D&M Leasing’s Dallas office. On or around April 12, 2019, Plaintiff returned
to D&M Leasing’s Dallas office, planning to exchange the leased Lexus for another vehicle lease.
Plaintiff—allegedly feeling pressured by a D&M Leasing sales associate to purchase, rather than
lease, a new car—began negotiations for a purchase. Plaintiff claims he told the sales associate,
multiple times, that his pre-existing medical condition made certain safety features essential for
the safety of Plaintiff and those around him.6 Plaintiff allegedly intimated to the sales associate
that he was not interested in testing or purchasing any vehicle that did not have the requested safety
features.
Ultimately, Plaintiff signed a sales agreement for a 2017 Nissan Murano.

Plaintiff

maintains that he was unaware that the parties had reached a purchase agreement. Plaintiff claims
that the sales associate led him to believe the sale was not complete and that Plaintiff was merely
taking the vehicle home for an extended test drive or only to “try it out” (Dkt. #1). Plaintiff further
alleges that he was not provided with documentation regarding the purchase agreement, financing
of the purchase, or the vehicle trade-in at any time before or after the transaction.

4

Richardson, Texas falls within the Northern District of Texas.
D&M Leasing’s offices are all within the state of Texas. Their offices are in Dallas, Fort Worth, Houston, and Grand
Prairie. D&M Leasing’s principal office is the Fort Worth office (Dkt. #6, Exhibit A). None of D&M Leasing’s
offices are within the Eastern District of Texas.
6
Plaintiff requested the vehicle have a front camera, backup camera, and side mirror indicators for lane changes.
5

2

Case 4:20-cv-00309-ALM Document 20 Filed 07/28/20 Page 3 of 10 PageID #: 119

Following the sales agreement’s completion, Plaintiff drove the 2017 Nissan from D&M
Leasing’s Dallas office to his residence in Richardson, Texas. Subsequently, Plaintiff learned that
the vehicle did not have the requested safety features. D&M Leasing claims that the first time it
learned of Plaintiff’s dissatisfaction with the vehicle was several months later through Plaintiff’s
letter in October 2019.7 Plaintiff, however, claims that he returned to D&M Leasing’s Dallas
office in the days following the formation of the original purchase agreement to seek rescission of
the agreement. It is undisputed that neither Plaintiff nor Defendants reside in the Eastern District
of Texas. However, Plaintiff alleges he drives through the Eastern District of Texas with the
vehicle in dispute.
II.

Procedural History
On March 13, 2020, Plaintiff filed his Complaint (Dkt. #1). On May 11, 2020, Defendant

D&M Leasing Dallas filed its Rule 12(b)(3) Motion to Dismiss for Improper Venue (Dkt. #6). On
May 11, 2020, Ally Financial filed its Rule 12(b)(3) Motion to Dismiss for Improper Venue and
Adoption and Joinder of Defendant D&M Leasing Dallas’ Rule 12(b)(3) Motion to Dismiss for
Improper Venue (Dkt. #8). On May 22, 2020, Plaintiff filed his Response (Dkt. #12). On May
29, 2020, Defendant D&M Leasing Dallas filed its Reply (Dkt. #13). That same day, Defendant
Ally Financial Inc. filed its Reply and Adoption and Joinder of Defendant D&M Leasing Dallas’
Reply (Dkt. #14).
LEGAL STANDARD
I.

Rule 12(b)(3) Motion
Federal Rule of Civil Procedure 12(b)(3) allows a party to move to dismiss an action for

“improper venue.” FED. R. CIV. P. 12(b)(3). Once a defendant, by motion, challenges venue as

7

Plaintiff sent the letter in an attempt to resolve the issues.

3

Case 4:20-cv-00309-ALM Document 20 Filed 07/28/20 Page 4 of 10 PageID #: 120

improper “the burden of sustaining venue will be on [the] Plaintiff.” Cincinnati Ins. Co. v. RBP
Chem. Tech., Inc., No. 1:07-CV-699, 2008 WL 686156, at *5 (E.D. Tex. Mar. 6, 2008). “Plaintiff
may carry this burden by establishing facts that, if taken to be true, establish proper venue.” Id.
(citations omitted).
The Court “must accept as true all allegations in the complaint and resolve all conflicts in
favor of the plaintiff.” Mayfield v. Sallyport Glob. Holdings, Inc., No. 6:16-CV-459, 2014 WL
978685, at *1 (E.D. Tex. Mar. 5, 2014) (citing Ambraco, Inc. v. Bossclip, B.V., 570 F.3d 233, 237–
38 (5th Cir. 2009)). In determining whether venue is proper, “the Court may look beyond the
complaint to evidence submitted by the parties.” Ambraco, 570 F.3d at 238. If venue is improper,
the Court must dismiss, “or if it be in the interest of justice, transfer such case to any district or
division in which it could have been brought.” 28 U.S.C. § 1406(a); FED. R. CIV. P. 12(b)(3).
II.

Section 1406 Transfer
A § 1406 transfer allows a court that is an improper venue or that lacks personal jurisdiction

to, “if it be in the interest of justice, transfer such case to any district or division in which it could
have been brought.” 28 U.S.C. §1406(a).
If by reason of the uncertainties of proper venue a mistake is made, Congress, by the
enactment of § 1406(a), recognized that ‘the interest of justice’ may require that the
complaint not be dismissed but rather that it be transferred in order that the plaintiff not be
penalized by what the late Judge Parker aptly characterized as time-consuming and justicedefeating technicalities.
Goldlawr, Inc. v. Heiman, 369 U.S. 463, 467 (1962) (citations omitted).
As the Supreme Court has stated, § 1406(a) “instructs a court to transfer a case from the
wrong district to a district in which it could have been brought.” Atl. Marine Const. Co. v. U.S.

4

Case 4:20-cv-00309-ALM Document 20 Filed 07/28/20 Page 5 of 10 PageID #: 121

Dist. Court for W. Dist. of Tex., 571 U.S. 49, 58 (2013) (citations omitted). The Fifth Circuit has
reiterated this point by saying a court “c[an] transfer a case under 28 U.S.C. § 1406(a) in lieu of
dismissing the action.” Phillips v. Ill. Cent. Gulf R.R., 874 F.2d 984, 987 (5th Cir. 1989); see also
Fogarty v. USA Truck, Inc., 242 F. App’x 152, 154 (5th Cir. 2007) (acknowledging “that a district
court may transfer a case” even where it lacks an essential element of jurisdiction like venue or
personal jurisdiction).
ANALYSIS
Defendants moved to dismiss Plaintiff’s claims pursuant to 12(b)(3). For the reasons
discussed below, the Court finds that the Eastern District of Texas is not a proper venue under 28
U.S.C. § 1391. Accordingly, the Court finds in the interest of justice the case should be transferred
to the Northern District of Texas, Dallas Division.
I.

Motion to Dismiss for Improper Venue Pursuant to 28 U.S.C. § 1391
Plaintiff argues that venue is proper in the Eastern District of Texas because he regularly

drives the vehicle purchased from Defendants in the Eastern District. Plaintiff maintains that the
Court should consider events which occurred after his claims materialized—notwithstanding the
mere tangential connection the presented event has to the claims alleged. The Court disagrees.
The text of § 1391(b)(2) permits venue in a “district in which a substantial part of the events
or omissions giving rise to the claim occurred.” 28 U.S.C. § 1391(b)(2) (emphasis added). The
Fifth Circuit instructs that a court must “recognize the distinction between the facts giving rise” to
each “separate claim” pleaded by the Plaintiff. Trois v. Apple Tree Auction Ctr., Inc., 882 F.3d
485, 493 (5th Cir. 2018). In Trois, the Fifth Circuit held that a district court “reached an erroneous
conclusion of law,” because the court “looked outside the specific events giving rise to the
[plaintiff’s] claim.” Id. Accordingly, the text’s requirement that only “events or omissions giving

5

Case 4:20-cv-00309-ALM Document 20 Filed 07/28/20 Page 6 of 10 PageID #: 122

rise to the claim” are to be considered prohibits the Court from consideration of post-hoc
tangentially related events. 28 U.S.C. § 1391(b)(2).
In the present case, all the claims pleaded by the Plaintiff arise from a single series of
events. As such, a substantial part, if not all, of these events giving rise to Plaintiff’s claims against
Defendants occurred entirely within either Plaintiff’s home in Richardson, Texas, or D&M
Leasing’s Dallas office—which are both located in the Northern District of Texas. Consequently,
this Court cannot conclude that “a substantial part of the events or omissions giving rise to the
claim[s] occurred” in the Eastern District of Texas.
A. Plaintiff’s TILA Claim
Plaintiff’s first claim, violation of TILA, arises from the alleged failure of the Defendants
to provide necessary documentation. TILA was enacted to “assure a meaningful disclosure of
credit terms.” 15 U.S.C. § 1601(a). TILA empowers the Board of Governors of the Federal
Reserve System to promulgate regulations meant to ensure the implementation of TILA. 12 C.F.R.
§ 226.1(a). Under this power, the Board of Governors promulgated ‘Regulation Z’ which requires
creditors “make disclosures before consummation of the transaction.” 12 C.F.R. § 226.17(b). As
Defendants note, the lease transaction in this case occurred at Defendant D&M Leasing’s Dallas
office. Even further, all dealings and communications between Plaintiff and Defendants occurred
at D&M Leasing’s Dallas office, including discussions regarding the vehicle at the center of this
dispute. Therefore, the Court is not persuaded by Plaintiff’s assertion that venue is proper in the
Eastern District of Texas because Plaintiff drove the vehicle in this district after the transaction
was finalized. Thus, accepting as true all allegations in the complaint and resolving all conflicts
in favor of Plaintiff, the Court concludes that a substantial portion of the events or omissions giving
rise to Plaintiff’s TILA claims did not occur in the Eastern District of Texas.

6

Case 4:20-cv-00309-ALM Document 20 Filed 07/28/20 Page 7 of 10 PageID #: 123

B. Plaintiff’s Fraudulent Misrepresentation Claim
Plaintiff’s

second

claim,

fraudulent

misrepresentation,

arises

misrepresentations made by Defendants prior to the sales completion.

from

alleged

The alleged

misrepresentations concern Plaintiff’s former Lexus vehicle’s trade-in value and the new vehicle’s
safety features. A fraudulent misrepresentation claim requires that there was “(1) a material
misrepresentation (2) that was false (3) [and] made with the knowledge that it was false or made
recklessly without any knowledge of the truth and as a positive assertion (4) with the intention that
it be acted upon by the other party.” Siltek Grp. Tex., LLC v. A&A Landscape & Irrigation LP,
No. 05-17-00042-CV, 2018 WL 3342691, at *3 (Tex. App. July 9, 2018) (emphasis added). The
alleged misrepresentations are essential components of a sales transaction and must be made “with
the intention that [they] be acted upon by the other party.” Id. Given the relationship between
parties—sales agent to potential consumer—the goal of the sales agent is to have the potential
consumer consummate a sale. The only act that can be reasonably inferred as the intended
consequence of the alleged misrepresentation is the sale of the vehicle. The vehicle in dispute was
sold at D&M Leasing’s Dallas office, which is in the Northern District of Texas. As such, the
events or omissions giving rise to this claim occurred in the Northern District of Texas.
Accordingly, the Court finds that venue is not proper in the Eastern District based on this claim.
C. Plaintiff’s Negligent Misrepresentation Claim
Third, Plaintiff’s negligent misrepresentation claim arises from the same events as the
fraudulent misrepresentation claim above.

The four essential elements of a negligent

misrepresentation claim are “(1) defendant’s representation to a plaintiff in the course of
defendant’s business or in a transaction in which the defendant had an interest; (2) defendant’s
providing false information for the guidance of others; (3) defendant’s failure to exercise

7

Case 4:20-cv-00309-ALM Document 20 Filed 07/28/20 Page 8 of 10 PageID #: 124

reasonable care or competence in obtaining or communicating information; (4) plaintiff’s
justifiable reliance on defendant’s representation.” Willis v. Marshall, 401 S.W.3d 689, 698 (Tex.
App.—El Paso 2013, no pet.) (quoting Miller v. LandAmerica Lawyers Title of El Paso, 362
S.W.3d 842, 845 (Tex. App.—El Paso 2012, no pet.)). The first and second elements are alleged
to be the car sale and the pre-transaction representations regarding the Lexus’s trade-in value and
new vehicle’s safety feature. The third element requires the Defendant to have been negligent
prior to the transaction and in his communication with Plaintiff at the D&M Leasing’s Dallas
office. The fourth element is alleged as the Plaintiff’s reliance on Defendant’s statements when
consummating the sale. Consequently, all substantial events of the claim occurred during the
conversation between the parties, prior to the sale, at D&M Leasing’s Dallas office—located
outside the Eastern District of Texas. Accordingly, the Court finds that venue is not proper in the
Eastern District based on this claim.
D. Plaintiff’s DTPA Claim
Plaintiff’s fourth claim, violation of the DTPA, also accrued at D&M Leasing’s Dallas
office. Plaintiff alleges Defendant “fail[ed] to disclose information concerning goods or services
which was known at the time of the transaction if such failure to disclose such information was
intended to induce the consumer into a transaction [in] which the consumer would not have entered
had the information been disclosed.” Tex. Bus. & Com. Code Ann. § 17.46(b)(24) (emphasis
added). The statute further prohibits “deceptive acts or practices in the conduct of any trade or
commerce.” Tex. Bus. & Com. Code Ann. § 17.46(a) (emphasis added). Violation of this statute
results in accrual of the claim upon the conclusion of a sale when requisite disclosures are not
made or when deceptive acts or practices are employed. Accordingly, the events giving rise to
this claim only include events directly connected to the transaction, which occurred in the Northern

8

Case 4:20-cv-00309-ALM Document 20 Filed 07/28/20 Page 9 of 10 PageID #: 125

District of Texas at D&M Leasing’s Dallas office. Accordingly, the Court finds that venue is not
proper in the Eastern District based on this claim.
E. Plaintiff’s Breach of Express Warranty Claim
Plaintiff’s fifth claim, breach of express warranty, arises from the bargain which occurred
in D&M Leasing’s Dallas office. Plaintiff specifically alleges Defendant D&M Leasing expressly
promised that the [v]ehicle ha[d] a backup camera, front camera, and side mirror indicators. These
safety features were the basis of the bargain, and Plaintiff alleges that his injuries were caused by
the [v]ehicle’s missing safety features (Dkt. #1). Accordingly, the claim accrued upon transfer of
possession of the vehicle from Defendant D&M Leasing to the Plaintiff—which occurred in the
Northern District of Texas at D&M Leasing’s Dallas office. Thus, “a substantial part of the events
or omissions giving rise to” Plaintiff’s breach of warranty claim did not occur in the Eastern
District of Texas.
In sum, all the “events or omissions giving rise to” Plaintiff’s claims occurred within either
the Plaintiff’s home in Richardson, Texas, or D&M Leasing’s Dallas office, which are both located
in the Northern District of Texas. Accordingly, this Court finds venue is improper in the Eastern
District of Texas under § 1391(b).
II.

Transfer Pursuant to 28 U.S.C. § 1406
Notwithstanding the Court’s finding that venue is improper under § 1391, the Court finds,

in the interest of justice, the case should not be dismissed but rather transferred to a proper
district—here, the Northern District of Texas, Dallas Division. 28 U.S.C. § 1406.
CONCLUSION
For the foregoing reasons, it is therefore ORDERED that Defendants’ Rule 12(b)(3)
Motion to Dismiss for Improper Venue (Dkt. #6, Dkt. #8) is GRANTED as set forth herein.

9

.

Case 4:20-cv-00309-ALM Document 20 Filed 07/28/20 Page 10 of 10 PageID #: 126

It is hereby ORDERED that this case be transferred to the Northern District of Texas,
Dallas Division.
SIGNED this 28th day of July, 2020.

___________________________________
AMOS L. MAZZANT
UNITED STATES DISTRICT JUDGE

10