Colorado Ranchers, Inc. v. Jana Food Service, Inc. et al

Filing 24

ORDER granting 8 Motion to Dismiss for Lack of Personal Jurisdiction or, in the Alternative, to Transfer Proceeding to the Northern District of Texas, by Magistrate Judge Scott T. Varholak on 6/5/2017. (jgonz, )[Transferred from Colorado on 6/5/2017.]

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Civil Action No. 17-cv-00463-STV
COLORADO RANCHERS, INC., a Colorado corporation,
Plaintiff,
v.
JANA FOOD SERVICE, INC., a Texas corporation,
EL CAMPESINO FOOD, LLC, a Texas limited liability company, and
NADER AHMAD, an individual,
Defendants.
______________________________________________________________________
ORDER
______________________________________________________________________
Magistrate Judge Scott T. Varholak
This matter comes before the Court on Defendants’ Motion to Dismiss for Lack of
Personal Jurisdiction or, in the Alternative, to Transfer Proceeding to the Northern
District of Texas (the “Motion”), filed February 28, 2017. [#8] This Court has carefully
considered the Motion and related briefing, the entire case file, and the applicable case
law, and has determined that oral argument would not materially assist in the disposition
of the instant Motion. For the following reasons, the Motion is GRANTED to the extent
it seeks transfer to the Northern District of Texas. 1
I.

Background
As alleged in the Complaint, Plaintiff is a Colorado corporation specializing in the

production and wholesale distribution of specialty cheeses and preserved meats. [#4, ¶
1] Defendant Jana Food Services, Inc. (“Jana”) is a Texas corporation with its principal
1

The Parties have consented to have a United States Magistrate Judge conduct all
proceedings in this action, including the entry of a final judgment. [#11, 12]

place of business in Texas, El Campesino Food, LLC (“ECF”) is a Texas limited liability
company, and Nader Ahmad is a Texas resident. [Id. at ¶¶ 2-4] Defendant Ahmed is
the owner and principal officer/manager of both JANA and ECF. 2 [Id. at ¶ 4] Jana and
ECF are distributors of food products to retail outlets. [Id. at ¶¶ 2-4]
The instant dispute arises out of a Distributor Agreement (the “Agreement”)
originally entered into by Plaintiff and Jana. [Id. at ¶ 9] Pursuant to the Agreement,
Jana was granted the “exclusive and non-assignable right” to sell Plaintiff’s products “in
the Dallas-Fort Worth metroplex” for a term of two years. [Id. at ¶ 10] Mr. Ahmad
signed a Personal Guarantee (“Personal Guarantee One”) whereby he guaranteed
payment of any sums Jana owed Plaintiff. [Id. at ¶ 16]
Within a few weeks of signing the Agreement, Mr. Ahmad approached Plaintiff
with a request that he be allowed to operate as a distributor through a different company
that he had recently established, ECF, without having to sign a new Agreement. [Id. at
¶ 19] Plaintiff agreed, but required Mr. Ahmad to sign a second Personal Guarantee for
the debts of ECF. [Id. at ¶ 21(b)] Mr. Ahmad agreed and signed a Personal Guarantee
of any sums ECF owed Plaintiff (“Personal Guarantee Two”). [Id. at ¶ 22]
On January 10, 2017, Plaintiff filed its Complaint in Denver District Court, alleging
that Jana and ECF currently owe Plaintiff $125,202.96 pursuant to the Agreement. [Id.
at ¶ 35] The Complaint brings actions for breach of the Agreement, breach of the
Personal Guarantees, breach of implied obligations and covenants of good faith and fair
2

In response to the Court’s Order to Show Cause [#22], Defendants clarified that Mr.
Ahmad is the sole member, manager, owner and officer of ECF, and that Mr. Ahmad
not only resides but also is domiciled in Texas. [#23, ¶¶ 7-10] Jana, ECF and Mr.
Ahmad thus are all citizens of Texas for jurisdictional purposes and the Court is satisfied
that diversity jurisdiction exists. Accordingly, the Court DISCHARGES the Order to
Show Cause.
2

dealing, alter ego, fraud and unjust enrichment.

[#4]

On February 21, 2017,

Defendants removed the action to this Court. [#1] One week later, Defendants filed the
instant Motion seeking dismissal for lack of personal jurisdiction or, in the alternative,
transfer of the proceedings to the Northern District of Texas. [#8]
In support of the Motion, Defendants submitted a Declaration of Nader Ahmad.
[#8-1] In it, Mr. Ahmad explains that Jana and ECF operate exclusively in Texas and
have never sold any products to any customers in Colorado. [Id. at ¶¶ 2-3] Mr. Ahmad
further declares that neither Jana nor ECF has any employees or offices in Colorado,
and that none of Defendants owns any property in Colorado. [Id. at ¶¶ 4-5] Aside from
distributing products for Plaintiff, all of which is distributed in Texas, neither Jana nor
ECF have ever conducted business in Colorado. [Id. at ¶¶ 6, 8] As part of Defendants’
dealings with Plaintiff, Mr. Ahmad traveled to Colorado on one occasion, to sign the
Agreement. [Id. at ¶ 9]
In contrast to Defendants’ limited contacts with Colorado, Mr. Ahmad declares
that Plaintiff employs personnel in Texas to conduct demonstrations of Plaintiff’s
products at retail outlets.

[Id. at ¶ 12]

Jana and ECF “routinely coordinated their

marketing efforts in Texas outlets with these Texas-based representatives.” [Id. at ¶¶
12-13] Mr. Ahmad also has often met with Plaintiff’s representatives in Texas. [Id. at ¶
11]

Mr. Ahmad asserts that one of the areas of dispute between Plaintiff and

Defendants involves Plaintiff’s alleged attempts to sell directly to retailers in the DallasFort Worth area, contrary to the exclusive distribution rights set forth in the Agreement.
[Id. at ¶¶ 16-17] According to Mr. Ahmad, these exclusive distribution disputes are the
reason why Defendants have not paid Plaintiff the amounts allegedly due. [Id. at ¶ 19]

3

On March 28, 2017, Plaintiff filed its Opposition to the Motion. [#17] In support
of its Opposition, Plaintiff submitted an Affidavit of Gabriel Robles, Plaintiff’s President
and majority owner. [#17-1] Mr. Robles explains that in September 2014, he was
contacted by a Jana representative about Jana becoming a distributor for Plaintiff. 3
[#17-1 at ¶ 7] From September 2014 through December 2014, Jana representatives
made numerous calls to Plaintiff and “mounted a campaign” to convince Plaintiff to work
through Jana in the Dallas-Fort Worth market. [Id. at ¶ 9] Mr. Robles traveled to Texas
to meet with Mr. Ahmad. [Id. at ¶ 11] During the week of February 22, 2015, Mr.
Ahmad came to Denver, received training and ultimately signed the Agreement. 4 [Id. at
14] According to Mr. Robles, “[h]ad Mr. Ahmad not made the repeated attempts to
convince [Plaintiff] to allow it to be a distributor, with what we now know to be false
representations and promises, [Plaintiff] would never have entered into any business
relationship with Mr. Ahmad or his companies.” [Id. at ¶ 22]
Defendants filed their Reply in Support of Defendants’ Motion on April 21, 2017.
[#20] This Court had previously entered a Scheduling Order on March 28, 2017. [#16]
Pursuant to that Scheduling Order, the discovery cut-off is November 13, 2017, and the
dispositive motions deadline is November 20, 2017. [Id. at 10] Trial has not yet been
set.

3

The Affidavit states that this contact occurred in September 2015, but the emails make
clear that the contact occurred in September 2014. [17-3]
4
In his Affidavit, Mr. Robles indicates that Personal Guarantee One also was signed by
Mr. Ahmad while he was in Denver. [Id. at ¶ 14] Personal Guarantee One, however, is
dated March 3, 2015 [#4 at 22], whereas Mr. Robles indicates in his affidavit that Mr.
Ahmad was only in Denver until February 26, 2015 [#17-1, at ¶ 14].
4

II.

Analysis
“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.” 28
U.S.C. § 1404(a). Section 1404(a) gives “discretion [to] the district court to adjudicate
motions for transfer according to an individualized, case-by-case consideration of
convenience and fairness.” Stewart Org., Inc. v. Ricoh Corp., 487 U.S. 22, 29 (1988)
(internal quotations and citations omitted). The statute was intended to revise the forum
non conveniens doctrine and “[c]ourts therefore enjoy greater discretion to transfer a
cause pursuant to § 1404(a) than to dismiss the action based upon forum non
conveniens.” Chrysler Credit Corp. v. Country Chrysler, Inc., 928 F.2d 1509, 1515 (10th
Cir. 1991). Nonetheless, Section 1404 “does not allow a court to transfer a suit to a
district which lacks personal jurisdiction over the defendants, even if they consent to suit
there.” Id. The party moving to transfer a case pursuant to Section 1404 bears the
burden of establishing that the existing forum is inconvenient. Id.
Here, there is no dispute that the case could have been brought in the Northern
District of Texas as that district has personal jurisdiction over all Defendants. As a
result, the only issue is whether Defendants have met their burden of showing that the
existing forum is inconvenient such that the interests of justice support transferring the
case to the Northern District of Texas. In evaluating that issue, the Court is 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
5

advantages and obstacles to a fair trial; 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)).
Here, Plaintiff has chosen Colorado as the forum, and that factor weighs against
transfer. Other factors, however, support transfer. First, the accessibility of witnesses,
including the availability of compulsory process, supports transfer to Texas. Defendants
have indicated that they intend to bring counterclaims concerning Plaintiff’s alleged
breach of the exclusive distribution rights set forth in the Agreement. [#8 at 15] Virtually
all of those witnesses, including all of the retailers, are located in Texas. [Id.; #4, ¶ 10
(explaining that the exclusive dealership area was limited to the Dallas-Fort Worth
metroplex)]

These Texas retailers would not be subject to compulsory process in

Colorado. See Fed. R. Civ. P. 45(c)(1).
Second, the cost of making the necessary proof supports a transfer. Besides the
retailers,

Defendants

have

identified

their

personnel

and

Plaintiff’s

Texas

representatives as potential witnesses. [#8 at 15] All of those individuals reside in
Texas. In contrast, Plaintiff has identified a single Colorado witness, Mr. Robles, who
would be needed for trial. [#17 at 9-10] Given that the majority of witnesses reside in
Texas, it would be more cost efficient to litigate this matter there.
Third, consideration of the relevant advantages and obstacles to a fair trial
supports transfer. Again, the Texas retailers are not subject to compulsory process in
Colorado. Without the retailers, Defendants could be prejudiced in their ability to pursue

6

their intended counterclaim. Fairness supports transferring this case to a district where
all necessary witnesses can be subpoenaed. See Logsdon v. BNSF Railway Co., No.
15-cv-00396-CMA-MJW, 2015 WL 3903512, at *4 (D. Colo. June 24, 2015).
Weighing the Chrysler Credit Corp. factors, 5 the Court finds that the existing
forum is inconvenient and the interests of justice support transferring the case to the
Northern District of Texas. Nearly all of the witnesses reside in Texas, and the lawsuit
entails a dispute over an exclusive distribution agreement for territory in Texas. Jana
and ECF operate exclusively in Texas and do not have any employees or offices in
Colorado. In contrast Plaintiff employs personnel in Texas and distributes its products
in Texas. Considering these factors, the Court finds that the case should be transferred
to the Northern District of Texas.
Accordingly, for the reasons stated above, the Court GRANTS Defendants’
Motion to Dismiss for Lack of Personal Jurisdiction or, in the Alternative, to Transfer
Proceeding to the Northern District of Texas [#8] to the extent it seeks transfer to the
Northern District of Texas.
Further, it is ORDERED that this action be transferred to the Northern District of
Texas for further prosecution and adjudication.

DATED: June 5, 2017

BY THE COURT:

s/Scott T. Varholak
United States Magistrate Judge

5

The remaining Chrysler Credit Corp. factors neither support nor undermine transfer.
7