Barton v. Cullinan

Filing 12

ORDER AND MEMORANDUM DECISION denying 4 Motion to Dismiss. Signed by Judge Tena Campbell on 12/29/14 (alt)

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF UTAH
CENTRAL DIVISION

THOMAS R. BARTON, as Receiver over the
Non-Exempt Assets of Bernard C. Buchanan,
et al.,
Plaintiff,

ORDER
AND

vs.

MEMORANDUM DECISION

ANN L. CULLINAN,

Case No. 2:14-cv-706
Defendant.

This is one of many receivership cases arising out of the collapse of an alleged Ponzi
scheme run by Val Southwick.1 Attorney Robert Wing was appointed receiver of the Vescor
entities and sued Bernard Buchanan and his entities in Wing v. Buchanan, et al., Case No. 2:08cv-00803-DB, alleging that Mr. Buchanan and his entities received money and other assets from
Vescor and that the payments constituted fraudulent transfers.
After Mr. Wing obtained a judgment against Mr. Buchanan and his entities, Plaintiff
Thomas Barton was appointed as the receiver for Mr. Buchanan’s non-exempt assets and certain
Buchanan entities. In his role as receiver, Mr. Barton seeks to recover assets from Defendant Ann

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Mr. Southwick allegedly used a web of entities collectively known as Vescor in his
scheme. The underlying case is SEC v. Vescorp Capital Corp., et al., Case No. 1:08-cv-00012DB.

Cullinan, Mr. Buchanan’s daughter, based on a fraudulent transfer theory. In lieu of an answer,
Ms. Cullinan filed a Motion to Dismiss Under Rule 12(b)(3) for Lack of Venue. (Dkt. No. 4.)
The court has examined the parties’ briefs and the applicable law and finds that oral
argument is not necessary to decide the issues before it.
ANALYSIS
Relying on 28 U.S.C. § 1391, Ms. Cullinan argues that venue is improper in Utah because
she is an Arizona resident, all other parties involved in the relevant transfers reside in states other
than Utah, and the property at issue is located in Arizona.
The court disagrees that venue is improper under § 1391. The court further concludes
that, under the statutes applicable in receivership cases, venue is proper in Utah.
Section 1391 reads in relevant part, “A civil action may be brought in . . . a judicial
district in which a substantial part of the events or omissions giving rise to the claim occurred.”
28 U.S.C. § 1391(b)(2). The receiver’s claims in this case stem from a judgment against Robert
Buchanan obtained in a Utah case, which arose out of an alleged Ponzi scheme that was also
litigated in Utah. Under these facts, a substantial part of the events giving rise to the claims
occurred in Utah, and venue is proper.
Moreover, under 28 U.S.C. § 754, “[a] receiver appointed in any civil action or
proceeding involving property, real, personal or mixed, situated in different districts shall . . . be
vested with complete jurisdiction and control of all such property with the right to take
possession thereof.” In addition, the receiver “shall have capacity to sue in any district without
ancillary appointment.” Id. “Courts have held that under this provision, where a ‘receiver’s
complaint was brought to accomplish the objectives of the Receivership Order and was thus
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ancillary to the court’s exclusive jurisdiction over the receivership estate, venue was properly
established.’” Klein v. Petty, No. 2:11-cv-01099-RJS, 2013 WL 4780760, at *5 (D. Utah Sept. 5,
2013) (unpublished) (quoting SEC v. Bilzerian, 378 F.3d 1100, 1107 (D.C. Cir. 2004)).
Here, venue is proper in Utah because the complaint was brought against Ms. Cullinan as
part of Mr. Barton’s efforts to execute the receivership order in Mr. Buchanan’s case. The
complaint in this case is ancillary to the court’s jurisdiction over the receivership estate, which
establishes proper venue in Utah.
Although venue is proper under § 1391 and § 754, the court may transfer venue on a
party’s motion and in the court’s discretion, but only “[f]or the convenience of parties and
witnesses, in the interest of justice.” 28 U.S.C. § 1404(a)-(b). “For more than five decades, [the
Tenth Circuit] has required the movant to demonstrate that the balance of factors ‘strongly
favors’ a transfer of venue under § 1404(a).” Employers Mut. Cas. Co. v. Bartile Roofs, Inc., 618
F.3d 1153, 1167 n.13 (10th Cir. 2010). “Unless the balance is strongly in favor of the movant, the
plaintiff’s choice of forum should not be disturbed.” Klein v. Cornelius, No. 2:11-cv-01159DAK, 2012 WL 2261114, at *9 (D. Utah June 15, 2012) (unpublished) (citing Bartile Roofs, 618
F.3d at 1167). Moreover, “this general rule is magnified in a receivership action.” Id. (quotations
omitted); see also Petty, 2013 WL 4780760, at *6 (“In a receivership case like this, the court
gives even greater weight to Plaintiff’s choice of forum.”).
Similar to this case, the receiver in Cornelius sought to recover assets based on an alleged
fraudulent transfer to an out-of-state resident. 2012 WL 2261114, at *1. The defendant claimed
that venue was improper and should have been transferred in part “because the alleged transfer
occurred in Texas” and “the witnesses and evidence [were] located in that district.” Id. at *9. But
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this court declined to transfer venue and explained:
This District established the receivership and this District has a substantial interest
in overseeing the actions brought to recover the assets of the receivership estate.
Litigating this case in this District will ensure that the Receiver can most efficiently
manage and prosecute his claims. Defendants [sic] claim that all the evidence and
witnesses are in Texas is conclusory and insufficient. All the documents and records
of the receivership entities are in Utah. . . . The court, therefore, concludes that there
is no compelling reason to transfer this case to Texas.
Id.
This court sees no compelling reason to transfer this case to a different venue. A court
in this district established the receivership and has an interest in ensuring that Mr. Barton can
efficiently manage the various claims and recover assets. The court will respect Mr. Barton’s
choice of forum and will not transfer venue.
ORDER
For the foregoing reasons, Ms. Cullinan’s Motion to Dismiss Under Rule 12(b)(3) for Lack
of Venue (Dkt. No. 4) is DENIED.
DATED this 29th day of December, 2014.
BY THE COURT:

TENA CAMPBELL
U.S. District Court Judge

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