Branch Banking and Trust Company v. Okay

Filing 13

MEMORANDUM OPINION. Signed by District Judge James C. Cacheris on 8/23/2016. (rban, ) [Transferred from Virginia Eastern on 8/24/2016.]

IN THE UNITED STATES DISTRICT COURT FOR THE
EASTERN DISTRICT OF VIRGINIA
Alexandria Division

BRANCH BANKING & TRUST CO.,
Plaintiff,
v.
CHRISTOPHER M. OKAY,
Defendant.

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M E M O R A N D U M

1:16cv555(JCC/JFA)

O P I N I O N

This matter is now before the Court on Defendant
Christopher M. Okay’s (“Defendant” or “Okay”) Motion to Dismiss
for Improper Venue, or in the Alternative, Transfer the Action1
[Dkt. 2], and Plaintiff Branch Banking and Trust Company’s
(“Plaintiff” or “BB&T”) Motion to Remand [Dkt. 6].

For the

following reasons, the Court denies Defendant’s Motion to
Dismiss for Improper Venue, denies Plaintiff’s Motion to Remand,
grants Defendant’s Motion to Transfer, and transfers the action
to the Western District of Virginia, Harrisonburg Division.
I. Background
At the motion to dismiss stage, the Court must read
the complaint as a whole, construe the complaint in a light most

1

For ease of reference, the Court will occasionally treat
this motion as two distinct motions, “Defendant’s Motion to
Dismiss for Improper Venue” and “Defendant’s Alternative Motion
to Transfer,” based on the distinct forms of relief requested.
1

favorable to the plaintiff, and accept the facts alleged in the
complaint as true.

Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).

The following facts, taken from Plaintiff’s Complaint
[Dkt. 1-4], Plaintiff’s Amended Complaint [Dkt. 11], Defendant’s
Notice of Removal [Dkt. 1], and the parties’ briefs are taken as
admitted only for purposes of the motions now before the court.
On or about August 22, 2007, Defendant and Former
Defendant Priscilla M. Okay submitted a retail loan application
seeking a line of credit from Plaintiff in the amount of
$101,000.00.

(Compl., ¶ 4.)

Plaintiff is a banking corporation

with its principle offices in Winston-Salem, North Carolina.
(Notice of Removal, ¶ 12.)

The Application was approved and

Plaintiff granted Defendant and Priscilla M. Okay a line of
credit with the maximum credit limit of $101,000.00.
¶ 5.)

(Compl. at

This loan is evidenced by a BB&T Tax Advantage Credit

Line Agreement and Initial Disclosure Statement (the “Tax
Advantage Credit Line”).

(Id. at ¶ 6.)

At the time the parties

entered into the Tax Advantage Credit Line, Defendant was
employed by Plaintiff as an attorney at its corporate
headquarters in Winston-Salem, North Carolina.
Supp. [Dkt. 3], at 2.)

(Def.’s Mem. in

The loan was secured by a security

interest in real property and improvements at 216 Hollow Tree
Court, Winston-Salem, North Carolina 27127 (the “Hollow Tree
Property”) for the benefit of Plaintiff.
2

(Compl., ¶ 8.)

Plaintiff’s security interest was recorded among the Land
Records of Davidson County, North Carolina as a Deed of Trust.
(Id.)
By October 14, 2014, Defendant had entered into
default on the Tax Advantage Line of Credit and Plaintiff
notified him that failure to cure the default could result in
acceleration of the entire balance due.

(Id. at ¶ 10.)

On

April 1, 2015, Plaintiff notified Defendant that it had elected
not to pursue foreclosure and would be releasing the lien on the
Hollow Tree Property, but would not be releasing Defendant from
his liability on any amounts due and owing under the Tax
Advantage Line of Credit.

(Id. at ¶ 11.)

On August 19, 2015, Plaintiff filed this suit against
Defendant and Former Defendant Priscilla Okay in the Circuit
Court for Arlington County, Virginia seeking the outstanding
balance under the Tax Advantage Line of Credit, prior accrued
interest, and reasonable attorney’s fees as provided for by the
Tax Advantage Line of Credit.

(Id., ¶ 15.)

On or about October

9, 2015, Plaintiff settled its claim against Former Defendant
Priscilla Okay for the sum of $25,000.00.

(Am. Compl., ¶ 15.)

Defendant was not served with this lawsuit until April 18, 2016.
(Notice of Removal, ¶ 4.)

When the lawsuit was filed, and when

Defendant received service of process, he lived in Staunton,
Virginia.

(Id.)
3

On May 18, 2016, Defendant removed the action to this
Court from the Circuit Court for Arlington County pursuant to 28
U.S.C. §§ 1332(a), 1441, and 1446.

(Id.)

Defendant then filed

his Motion to Dismiss for Improper Venue or in the Alternative,
Transfer the Action on May 25, 2016.

Defendant noticed a

hearing on his Motion for August 4, 2016.

Plaintiff has not

filed any opposition to Defendant’s Motion.

Plaintiff did,

however, file a Motion to Remand on June 23, 2016.
to Remand [Dkt. 6].)

(Pl.’s Mot.

Defendant filed his Opposition to

Plaintiff’s Motion to Remand on July 5, 2016.

At the August 4,

2016 hearing the Court addressed both Defendant’s Motion to
Dismiss for Improper Venue or, in the Alternative, Transfer the
Action and Plaintiff’s Motion to Remand.

Both Motions are now

ripe for decision.
II. Legal Standard
A. Plaintiff’s Motion to Remand
Plaintiff moves to remand this action back to the
Circuit Court for Arlington County pursuant to Federal Rule of
Civil Procedure 15(a) and 28 U.S.C. § 1447(c).
Civil actions over which a federal court would have
original jurisdiction can be removed by the defendant from state
court to the appropriate federal district court pursuant to 28
U.S.C. § 1441.

The party seeking removal bears the burden of

establishing federal jurisdiction.
4

See Mulcahey v. Columbia

Organic Chem. Co., 29 F.3d 148, 151 (4th Cir. 1994)(citing
Wilson v. Republic Iron & Steel Co., 257 U.S. 92, 97 (1921)).
“If federal jurisdiction is doubtful, a remand is necessary.”
Id. (citations omitted).
Federal courts have original jurisdiction over civil
actions between citizens of different States provided that “the
matter in controversy exceeds the sum or value of $75,000,
exclusive of interest and costs . . . .”

28 U.S.C. § 1332(a).

When determining the amount in controversy for purposes of
diversity jurisdiction, courts must look to the complaint as it
existed at the time of removal.

See St. Paul Mercury Indemnity

Co. v. Red Cab Co., 303 U.S. 283, 292 (1938); Alabama Great S.
Ry. Co. v. Thompson 200 U.S. 206, 215 (1906).

The court looks

to the amount asserted in good faith in the plaintiff’s
complaint at the time of removal, and will only question this
number where “it appears to a legal certainty that the plaintiff
cannot recover the jurisdictional amount.”
240 F.2d 424, 426 (4th Cir. 1957).

McDonald v. Patton,

The legal impossibility must

be “so certain as virtually to negative the plaintiff’s good
faith in asserting the claim.”

Wiggins v. N. Am. Equitable Life

Assurance Co., 644 F.2d 1014, 1017 (4th Cir. 1981)(quoting St.
Paul Mercury Indemnity Co., 240 F.2d at 426).
Although attorney’s fees are generally not included in
the amount in controversy calculation, “courts have created two
5

exceptions to this rule: ‘(1) if the fees are provided for by
contract; or (2) if a statute mandates or allows payment of
attorney’s fees.’”

Francis v. Allstate Ins. Co., 709 F.3d 362,

368 (4th Cir. 2013)(quoting 15-102 Moore’s Federal Practice,
Civil § 102.106(6)(a)).
B. Defendant’s Motion to Dismiss for Improper Venue
Federal Rule of Civil Procedure 12(b)(3) permits the
defendant to challenge the plaintiff’s choice of venue in a preanswer motion.

When a defendant challenges venue, the plaintiff

bears the burden of establishing that venue is proper.

T. and

B. Equip. Co., Inc. v. RI, Inc., No. 3:15-cv-337, 2015 WL
5013875, at *2 (E.D. Va. Aug. 24, 2015).

“[I]f no evidentiary

hearing is held, ‘the plaintiff need only make a prima facie
showing of venue.’”

Id. (quoting Mitrano v. Hawes, 377 F.3d

402, 405 (4th Cir. 2004)).

“The court need not accept the

pleadings as true, but instead may consider outside evidence.
However, the Court must still draw all inferences in favor of
the plaintiff.”

Id. (citations omitted).

When a plaintiff brings a case in an improper venue,
the district court may dismiss the action or transfer it “to any
district in which it could have been brought” if such transfer
is “in the interest of justice.”

28 U.S.C. § 1406(a).

When an action is removed from state court to federal
court, § 1441(a) expressly provides that the proper venue of a
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removed action is “the district court of the United States for
the district and division embracing the place where such action
is pending.” Polizzi v. Cowles Magazines, Inc., 345 U.S. 663,
666 (1953)(quoting 28 U.S.C. § 1441(a)).
C. Defendant’s Alternative Motion to Transfer
Where venue is proper, but convenience and the
interests of justice impel the use of either another proper
venue in which the action “might have been brought” or a
“district or division to which all parties have consented,” the
court may transfer the case to that district and division
pursuant to 28 U.S.C. § 1404(a).

See Brock v. Entre Computer

Ctrs., Inc., 933 F.2d 1253, 1257 (4th Cir. 1991).
III. Analysis
As a challenge to the exercise of this Court’s subject
matter jurisdiction, the Court must first resolve Plaintiff’s
Motion to Remand before turning to Defendant’s Motion to Dismiss
for Improper Venue and then, finally, to Defendant’s Alternative
Motion to Transfer Pursuant to 28 U.S.C. § 1404(a).
A. Plaintiff’s Motion to Remand
Plaintiff moves to remand this action on the grounds
that the amount in controversy is now below the $75,000
jurisdictional floor established by 28 U.S.C. § 1332(a).2

2

Defendant in this action is a citizen of Virginia. The
forum-defendant rule prohibits removal based solely on diversity
7

Plaintiff argues that because “prior to the removal of this
action to this Court, Plaintiff settled with former Defendant
Priscilla Okay for $25,000,” the principal balance now in
controversy in this action is “$65,881.34, an amount less than
the $75,000 jurisdictional amount.”
5-2] at 1.)

(Pl.’s Mem. in Supp. [Dkt.

While Plaintiff admits that its Complaint did not

reflect this settlement at the time of removal, it has since
amended its complaint to reflect that it now only seeks

jurisdiction when “any of the parties in interest properly
joined and served as defendants is a citizen of the State in
which such action is brought.” 28 U.S.C. § 1441(b)(2).
However, Plaintiff has failed to raise the forum-defendant rule
in its motion to remand or any of their other filings, relying
solely on its argument regarding the amount in controversy. At
least ten courts of appeals have concluded that the forumdefendant rule is purely procedural, and may therefore be
waived. See Brazell v. Waite, 525 F. App’x 878, 884 (10th Cir.
2013) (“[T]he forum-defendant rule is not jurisdictional and may
therefore be waived.”); Morris v. Nuzzo, 718 F.3d 660, 665 (7th
Cir. 2013); Young Kim v. Nat’l Certification Comm’n for
Acupuncture & Oriental Med., 888 F. Supp. 2d 78, 82 (D.C. Cir.
2012); RFF Family P’ship, LP v. Wasserman, 316 F. App’x 410, 411
(6th Cir. 2009); Lively v. Wild Oats Market, Inc., 456 F.3d 933,
939 (9th Cir. 2006); Handelsman v. Bedford Village Assoc. Ltd
P’ship, 213 F.3d 48, 50 n.2 (2d Cir. 2000); Blackburn v. United
Parcel Serv., Inc., 179 F.3d 81, 90 n.3 (3d Cir. 1999); Pacheco
de Perez v. AT&T Co., 139 F.3d 1368, 1372 n.4 (11th Cir. 1998);
In re Shell Oil Co., 932 F.2d 1518, 1523 (5th Cir. 1991); Farm
Constr. Servs. v. Fudge, 831 F.2d 18, 22 (1st Cir. 1987). But
see Horton v. Conklin, 431 F.3d 602, 605 (8th Cir. 2005)
(adhering to interpretation of forum-defendant rule as
jurisdictional). Although the Fourth Circuit has not considered
whether the forum-defendant rule is procedural or
jurisdictional, “it appears that if faced with the issue . . .
the Fourth Circuit would join the majority of circuit courts in
holding that the forum defendant rule is merely procedural.”
Councell v. Homer Laughlin China Co., 823 F. Supp. 2d 370, 378
(N.D.W. Va. 2011).
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“$65,881.34, plus prior accrued interest of $1,723.64, plus
costs and reasonable attorney fees.”
17).

(Am. Compl. [Dkt. 11], ¶

The Amended Complaint further notes that the Tax Advantage

Credit Line provides that in the event of default, Defendant is
responsible for “reasonable attorney fees of 15% of the
outstanding balance.”

(Id.)

Plaintiff is essentially arguing that its Amended
Complaint destroys this court’s jurisdiction by reducing the
amount in controversy to below the jurisdictional floor of
$75,000.

It is well settled law, however, that in cases which

are removed on the basis of 28 U.S.C. § 1332 diversity
jurisdiction, it is the complaint as it exists at the time of
removal which determines the amount in controversy, and no later
amendment of the complaint can destroy jurisdiction by reducing
the amount in controversy below the jurisdictional floor.

See

St. Paul Mercury Indemnity Co., 303 U.S. at 292 (1938).
Plaintiff cites to Dover v. Medstar Wash. Hosp. Ctr., Inc., 989
F.Supp.2d 57 (D.D.C. 2013) as supporting its position that a
later amendment of the complaint can serve to clarify that the
amount in controversy does not rise to the jurisdictional
amount, but the action in Dover had been removed on the basis of
28 U.S.C. § 1331 federal question jurisdiction.

Dover offers no

guidance whatsoever on how federal courts should determine the
amount in controversy for purposes of diversity jurisdiction.
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In order for Plaintiff’s settlement with Priscilla
Okay for $25,000 to bring the amount in controversy below the
jurisdictional amount, the settlement must create “a legal
certainty that the plaintiff cannot recover the jurisdictional
amount.”

McDonald v. Patton, 240 F.2d 424, 426 (4th Cir. 1957).

In that respect, Plaintiff’s Amended Complaint is instructive,
but not binding, as to the effect of the settlement on
Plaintiff’s legal ability to recover up to the jurisdictional
amount on their original Complaint at the time of removal.3
Accepting Plaintiff’s own calculation of the amount it could
legally recover against Defendant after the settlement with
Priscilla Okay, Plaintiff’s claim would have been valued at
$65,881.34 plus $1,723.64 in prior accrued interest, plus
reasonable attorney’s fees at the time of removal.

The prior

accrued interest is not considered in calculating the amount in
controversy for jurisdictional purposes.
1332(a).

See 28 U.S.C. §

The attorney’s fees, on the other hand, may be

considered as part of the amount in controversy for
jurisdictional purposes in this case.
Attorney’s fees are included in the jurisdictional
amount in controversy calculation in two circumstances: “(1) if

3

Plaintiff settled with Priscilla Okay before the notice of
removal had been filed. The effect of the settlement on
Plaintiff’s ability to recover the amount asserted in its
original Complaint therefore existed at the time of removal.
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the fees are provided for by contract; or (2) if a statute
mandates or allows payment of attorney’s fees.”

Francis, 709

F.3d at 368 (quoting 15-102 Moore’s Federal Practice, Civil §
102.106(6)(a)).

The first of those circumstances occurs here.

The Tax Advantage Credit Line provides that reasonable
attorney’s fees may be recovered, and The Tax Advantage Credit
Line further provides that reasonable attorney’s fees should be
calculated as 15% of the outstanding balance.

(Ex. 2 at ¶ 20.)

Such an arrangement is clearly valid under North Carolina law,
which provides that “obligations to pay attorneys’ fees upon any
note, conditional sale contract, or other evidence of
indebtedness . . . shall be valid and enforceable.”
Stat. § 6-21.2 (1967, as amended).

N.C. Gen.

The same statute goes on to

provide that “[i]f such note, conditional sale contract, or
other evidence of indebtedness provides for attorneys’ fees in
some specific percentage of the ‘outstanding balance’ as herein
defined, such provision and obligation shall be valid and
enforceable up to but not in excess of fifteen percent (15%) of
said ‘outstanding balance.’”

Id.

Under Plaintiff’s own analysis of the case, the
“outstanding balance” remaining after the settlement with
Priscilla Okay is $65,881.34.

The parties have agreed by

contract that attorney’s fees calculated as 15% of the
outstanding balance are presumptively reasonable in this case.
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While the Court may later decide that reasonable attorney’s fees
are in fact lower than 15% of the outstanding balance, this case
is sufficiently complex that the Court cannot say that it is a
legal certainty that reasonable attorney’s fees will be lower
than 15% of the outstanding balance.

Calculated as 15% of the

outstanding balance of $65,881.34, attorney’s fees in this case
would come to $9,882.20.

The jurisdictional amount in

controversy in this case is therefore at least $75,763.54,
calculated as the outstanding balance of $65,881.34 plus
$9,882.20 in attorney’s fees as provided for in the contract.
Therefore, even accepting Plaintiff’s assertions regarding the
effect of the settlement with Priscilla Okay on its claim
against Defendant, the complaint still meets the jurisdictional
amount in controversy requirements.

Accordingly, the Court

denies Plaintiff’s Motion to Remand.
B. Defendant’s Motion to Dismiss for Improper Venue
Defendant first requests dismissal pursuant to 28
U.S.C. § 1406(a).

Section 1406(a) requires district courts to

dismiss a case brought in an improper venue or, “if it be in the
interest of justice,” transfer such a case to a division and
district where venue would be proper.

28 U.S.C. § 1406(a).

Defendant contends that venue in this district is improper under
28 U.S.C. § 1391, so the Court must dismiss the action or
transfer the case to either the Middle District of North
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Carolina, or the Western District of Virginia, where he concedes
venue would be proper.

(Def.’s Mem. in Supp. [Dkt. 3] at 3-10.)

Because Plaintiff has failed to file any opposition to
Defendant’s Motion to Dismiss, the court “is ‘entitled, as
authorized, to rule on the . . . motion and dismiss [the] suit
on the uncontroverted bases asserted’ in the motion.”

White v.

Wal Mart Stores, Inc., Civil Action No. ELH-13-00031, 2014 WL
1369609, at *2 (D. Md. Apr. 4, 2014)(quoting Pueschel v. United
States, 369 F.3d 345, 354 (4th Cir. 2004)).

The district court

“also has discretion to decline to ‘grant a motion to dismiss
based on the failure to file a timely opposition when the motion
is plainly lacking in merit.’”

Brown-Henderson v. Capital One,

N.A., Civil Action No. DKC-13-3324, 2014 WL 3778689, *1 (D. Md.
July 29, 2014)(quoting White, 2014 WL 139609, at *2).

Here, the

court exercises that discretion and declines to grant the motion
to dismiss pursuant to § 1406(a) as it is plainly lacking in
merit.
Had Plaintiff initially filed this action in this
Court, the propriety of venue here would have been dubious at
best.

But Plaintiff did not initially bring this action in this

Court.

This case was brought before this Court by Defendant’s

removal of the action from Arlington County Circuit Court.

When

an action is removed from state court to federal court, “Section
1441(a) expressly provides that the proper venue of a removed
13

action is ‘the district court of the United States for the
district and division embracing the place where such action is
pending.’” Polizzi v. Cowles Magazines, Inc., 345 U.S. 663, 666
(1953)(quoting 28 U.S.C. § 1441(a)).

“Thus, 28 U.S.C. § 1391

‘has no application’ to actions that are removed.”

American

Ins. Marketing Corp. v. 5 Star Life Ins. Co., 958 F.Supp.2d 609,
613 (D. Md. 2013)(quoting Polizzi, 345 U.S. at 665-66).

To

determine the propriety of venue in an action which has been
removed to federal court, the Court need only determine whether
the action has been removed to the district court “‘for the
district and division embracing the place’ where the suit was
filed originally.”

Id.

This action was originally filed in the Circuit Court
for Arlington County.

That court, located in Arlington,

Virginia, lies within the geographical purview of this district
and division.

Because this action was removed to the district

and division embracing the Circuit Court for Arlington County,
where the suit was originally filed, venue is proper in this
Court pursuant to 28 U.S.C. § 1441(a).

Accordingly, the Court

denies Defendant’s Motion to Dismiss for Improper Venue pursuant
to 28 U.S.C. § 1406.
C. Defendant’s Motion to Transfer Pursuant to § 1404
In the alternative, Defendant has requested transfer
to the Middle District of North Carolina or the Western District
14

of Virginia as superior venues for this action pursuant to 28
U.S.C. § 1404(a).

Section 1404(a) provides that “[f]or 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).

At oral argument, the parties

consented to transfer to the Western District of Virginia,
Harrisonburg Division in the event that this Court found that
neither remand pursuant to 28 U.S.C. § 1447 nor dismissal
pursuant to 28 U.S.C. § 1406 were appropriate.

Both parties

further manifested that the Western District of Virginia would
be far more convenient for all parties and witnesses in this
case.

Because the Court has found that neither remand nor

dismissal is warranted in this case, the Court transfers the
case to the Western District of Virginia, Harrisonburg Division
as per the parties’ consent.
IV. Conclusion
For the foregoing reasons, the Court denies
Plaintiff’s Motion to Remand, denies Defendant’s Motion to
Dismiss for Improper Venue, grants Defendant’s Motion to
Transfer pursuant to 28 U.S.C. § 1404(a), and transfers the case

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to the Western District of Virginia, Harrisonburg Division. An
appropriate Order shall issue.

August 23, 2016
Alexandria, Virginia

/s/
James C. Cacheris
UNITED STATES DISTRICT COURT JUDGE

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