Horizon House v. Cain Brothers & Company, LLC, No. 2:2011cv01762 - Document 30 (W.D. Wash. 2012)
Court Description: ORDER denying 20 Defendant's Motion to Transfer Venue to Southern District of New York, by Judge James L. Robart.(MD)
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Horizon House v. Cain Brothers & Company, LLC Doc. 30 1 2 3 4 5 6 7 UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WASHINGTON AT SEATTLE 8 9 10 CASE NO. C11-1762JLR HORIZON HOUSE, 11 ORDER DENYING MOTION TO TRANSFER VENUE Plaintiff, 12 v. 13 14 15 CAIN BROTHERS & COMPANY, LLC, Defendant. 16 17 18 19 20 I. INTRODUCTION Before the court is Defendant Cain Brothers & Company’s (“Cain Brothers”) motion to transfer venue to the Southern District of New York (Dkt. # 20). The court has considered the parties’ memoranda and accompanying declarations filed in support and opposition to the motion. For the reasons stated below, the court DENIES the motion to 21 22 ORDER DENYING MOTION - 1 Dockets.Justia.com 1 transfer venue. 1 2 3 II. BACKGROUND In 2005, Plaintiff Horizon House, a Washington non-profit corporation, entered 4 into an “interest rate swap transaction” with Lehman Brothers Special Finance, Inc. 5 (“LBSF”). (Siver Decl. (Dkt. # 25) ¶ 4.) The notional amount of the transaction was 6 $28,400,000.00. (Id.) LBSF subsequently collapsed in 2008 and filed for bankruptcy. 7 (Id. ¶ 5.) Because the agreement between Horizon House and LBSF was ongoing at that 8 time, Horizon House sought the advice of Cain Brothers to help terminate its arrangement 9 with LBSF. (Id. ¶ 5.) Specifically, Horizon House’s Chief Financial Officer (“CFO”), 10 Carl Siver, communicated with Katherine Kirchhoff, the Managing Director of Cain 11 Brothers’ Los Angeles office. (Id. ¶ 8.) After those initial communications, Mr. Siver 12 negotiated an agreement via e-mail and telephone from Seattle, Washington with Ms. 13 Kirchhoff. (Id.) Under the agreement, Cain Brothers was to coordinate the termination 14 of Horizon House’s financial arrangement with LBSF. (Id. ¶¶ 7-8.) Cain Brothers 15 drafted, signed, and delivered an engagement letter to Mr. Siver in Seattle, who, after 16 obtaining the consent of his colleagues, signed the agreement. (Id. ¶ 9.) The signed 17 agreement contains no jurisdictional clause. (Comp. (Dkt. # 1-1) Ex. B.) 18 The instant dispute between Horizon House and Cain Brothers arose following the 19 alleged failure of Horizon House, who was being advised by Cain Brothers, to properly 20 terminate the financial arrangement with LBSF. (Comp. ¶¶ 10-21.) Under the original 21 1 No party has requested oral argument, and the court deems this motion appropriate for 22 disposition without it. ORDER DENYING MOTION - 2 1 contract between Horizon House and LBSF, the terminating party can select the date of 2 termination. (Comp. Ex. A § 6.) According to Horizon House, Cain Brothers set the date 3 of termination for October 23, 2008, but did not instruct Horizon House to forward the 4 requisite documents to LBSF until the following day—causing the termination to fail. 5 (Comp. ¶ 17.) 6 Horizon House subsequently filed claims against Cain Brothers for breach of 7 contract, negligence, indemnification, and contribution in Washington State Court. (Id. 8 ¶¶ 22-34.) Cain Brothers removed the action to this court. (Notice of Removal (Dkt. # 9 1).) 10 Because Horizon House allegedly failed to correctly terminate the agreement with 11 LBSF, LBSF filed a lawsuit against Horizon House seeking $5.2 million in a separate 12 action from the instant case. (Comp. ¶ 21.) That action is set to be mediated in 13 bankruptcy court in the Southern District of New York. (Siver Decl. ¶ 18.) 14 III. ANALYSIS 15 A. Legal Standard 16 Under 28 U.S.C. § 1404(a), a district court may transfer a civil action to another 17 district where it might have been brought if it is for the parties’ and witnesses’ 18 convenience and in the interest of justice. 28 U.S.C. § 1404(a). The court has broad 19 discretion to decide when considerations of convenience and fairness warrant a transfer 20 of venue. Jones v. GNC Franchising, Inc., 211 F.3d 495, 498 (9th Cir. 2000). 21 In Jones, the Ninth Circuit articulated the factors that a court should consider 22 when ruling on a motion to transfer venue under 28 U.S.C. § 1404(a). Id. at 498-99. ORDER DENYING MOTION - 3 1 Under Jones, the court must weigh the following factors: “(1) the location where the 2 relevant agreements were negotiated and executed, (2) the state that is most familiar with 3 the governing law, (3) the plaintiff’s choice of forum, (4) the respective parties’ contacts 4 with the forum, (5) the contacts relating to the plaintiff’s cause of action in the chosen 5 forum, (6) the differences in the costs of litigation in the two forums, (7) the availability 6 of compulsory process to compel attendance of unwilling non-party witnesses, . . . (8) the 7 ease of access to sources of proof,” and (9) the public policy of the forum state. Id. 8 B. Motion to Transfer Venue 9 The court has reviewed the factors articulated by the Jones court and concluded 10 that the balance of the factors, as applied to the present case, do not favor transferring 11 venue. Accordingly, for the reasons described below, the court denies Cain Brothers’ 12 motion to transfer venue. 13 1. Location Where the Agreement Was Negotiated and Executed 14 Horizon House and Cain Brothers negotiated their agreement outside of the 15 Southern District of New York, and Horizon House executed the agreement in Seattle. 16 As noted, Mr. Siver, Horizon House’s CFO, negotiated the agreement from Seattle with 17 Ms. Kirchhoff of Cain Brothers, who was then based in Los Angeles. (Siver Decl. ¶ 8.) 18 Moreover, Cain Brothers drafted and signed a copy of the agreement and presented it to 19 Mr. Siver in Seattle, where it was executed. 2 (Id. ¶ 9.) Consequently, the court finds that 20 21 2 Cain Brothers states that the agreement was drafted and “executed” by Cain Brothers in New York. (Mot. (Dkt. # 20) at 13.) However, “execute” is a term of art meaning to “to bring a 22 legal document into its final, legally enforceable form.” Black’s Law Dictionary (9th ed. 2009); ORDER DENYING MOTION - 4 1 the location where the agreement was negotiated and executed weighs in favor of 2 denying the motion to transfer venue. 3 2. The State Most Familiar with the Governing Law 4 Federal courts are equally equipped to apply distant state laws when the applicable 5 law is not complex. See, e.g., Barnstormers, Inc. v. Wing Walkers, LLC, No. 09cv2367 6 BEN (RBB), 2010 WL 2754249, at *3 (S.D. Cal. July 9, 2010) (stating that a federal 7 court in Texas would be equally adept at applying California law related unfair 8 competition claims). Here, neither of the parties has asserted that the substantive law will 9 be complex. Accordingly, regardless of the substantive state law applied in this case, 10 both district courts are equally equipped to handle the case, and thus, this factor is 11 neutral. 12 3. The Plaintiff’s Choice of Forum 13 Horizon House’s choice of forum weighs in favor in litigating this case in 14 Washington. Courts in this district have affirmed that plaintiffs’ choice of forum should 15 be given great weight. E.g., Nordquist v. Blackham, No. C06-5433 FDB, 2006 WL 16 2597931, at *3 (W.D. Wash. Sept. 11, 2006) (“Ordinarily, a plaintiff’s choice of forum is 17 accorded substantial weight, and courts will not grant a motion under § 1404(a) unless 18 the ‘convenience’ and ‘justice’ factors tip strongly in favor of transfer.”) (citing Piper 19 20 see also In re Roberts, 414 Fed. Appx. 761, 763 (6th Cir. 2011) (citing Black’s Law Dictionary 21 to define execute). Although Cain Brothers signed the document in New York, it was not “executed” until Mr. Siver had signed the contract in Seattle, thereby rendering it enforceable against all parties. Consequently, the agreement between Horizon House and Cain Brothers was 22 “executed” by Mr. Siver in Seattle—not in New York. ORDER DENYING MOTION - 5 1 Aircraft Co. v. Reyno, 454 U.S. 235, 257 (1981)); Wang v. LB Intern Inc., No. C042 2475JLR, 2005 WL 2090672, at *2 (W.D. Wash. Aug. 29, 2005) (“Courts usually will 3 not disturb a plaintiff’s choice of forum unless the ‘convenience’ and ‘justice’ factors 4 strongly favor venue elsewhere.”) (citing Securities Investor Prot. Corp. v. Vigman, 764 5 F.2d 1309, 1317 (9th Cir.1985)). 6 Furthermore, the court finds that Cain Brother’s removal of this case to federal 7 court does not diminish the weight given to Horizon House’s choice of forum. In Oien v. 8 Thompson, No. 09-3068 (JRT/RLE), 2010 WL 2985032, at *5 (D. Minn. July 26, 2010), 9 the court found that removal of the case to federal court did not affect the weight given to 10 the plaintiff’s choice of forum. Id. Specifically, the Oien court noted that a § 1404(a) 11 analysis is primarily meant to evaluate “convenience factors based on geography,” 12 meaning that a court’s analysis under § 1404(a) is largely based on factors that have little 13 to do with whether a case was originally filed in state court. Id. That analysis is sound. 14 The court, therefore, finds that in the present case the plaintiff’s choice of forum 15 maintains the great weight it is commonly given, irrespective of the case’s removal from 16 state court. 17 4. The Parties’ Contacts with the Forum 18 Although both parties have contacts with the present forum, Horizon House has 19 only limited contact with New York. Horizon House is a Washington non-profit 20 corporation that conducts business solely within the state. (Siver Decl. ¶ 4.) Beyond the 21 present case, the only contact the Horizon House has with New York is its upcoming 22 mediation with LBSF. (Id. ¶ 19.) ORDER DENYING MOTION - 6 1 In contrast, Cain Brothers, while headquartered in New York, regularly conducts 2 business in Washington. (Id. ¶ 15.) Cain Brothers’ employees, including Ms. Kirchloff, 3 traveled to Seattle to meet with Mr. Siver. (Id.) Additionally, Cain Brothers advertises 4 on its website that it conducts business in Washington. (Resp. (Dkt. # 24) at 3-4 .) 5 Although Cain Brothers has substantial contacts with New York, the court finds that 6 transferring venue is not warranted based on Horizon House’s limited contacts with the 7 Southern District of New York, and both parties’ contacts with the Western District of 8 Washington. 9 5. The Contacts Relating to the Plaintiff’s Cause of Action in the Chosen Forum 10 The events underlying Horizon House’s cause of action occurred in several 11 forums. As noted, the agreement at the center of the dispute between Horizon House and 12 Cain Brothers was negotiated between parties who were located in Seattle and Los 13 Angeles. (Siver Decl. ¶ 8.) Cain Brothers drafted and signed the agreement in New York 14 and then sent it to Seattle for final approval. (Smith Aff. (Dkt. # 21) ¶ 9.) The agreement 15 was then formally executed by Mr. Siver in Seattle. (Siver Decl. ¶ 9.) 16 For the purposes of § 1404(a), courts consider a number of varying factors when 17 determining the “the situs” of the action, including where the contract was negotiated and 18 executed, where business decisions causing the breach of contract took place, and where 19 the alleged conduct was directed. See Nike Inc. v. Lombardi, 732 F. Supp. 2d 1146, 1159 20 (D. Or. 2010) (stating that the situs of the action is where the contract in dispute was 21 negotiated and where the “misrepresentations” were directed); Hyatt Corp. v. Personal 22 ORDER DENYING MOTION - 7 1 Commc’n Indus., No. 04 C 4656, 2004 WL 2931288, at *3 (N.D. Ill. Dec. 15, 2004) 2 (stating that the situs of the action is where the contract was negotiated and executed and 3 where business decisions causing the breach took place). 4 In the present case, the business decisions allegedly causing the breach of the 5 contract were made in New York, while the contract was negotiated from and executed in 6 Seattle. Additionally, the consequences of the alleged breach of contract were 7 experienced in Washington. Thus, Horizon House’s cause of action relates more to the 8 current forum than the Southern District of New York. 9 10 6. The Differences in the Costs of Litigation in the Two Forums The court finds that the net litigation costs would not be significantly reduced by 11 transferring this case to New York. As this court noted in Wang, “the transfer must be ‘to 12 a more convenient forum, not to a forum likely to prove equally convenient or 13 inconvenient.’” Wang, 2005 WL 2090672, at *1 (citing Van Dusen v. Barrack, 376 U.S. 14 612, 645-46, (1964)). 15 Here, transferring the venue to New York would only shift the costs from Cain 16 Brothers to Horizon House, not reduce them. The two parties are based on opposite sides 17 of the country. (Siver Decl. ¶ 3; Smith Aff. ¶ 5.) Furthermore, both point to witnesses 18 who would be forced to travel across the country regardless of where the case is tried. 19 (Mot. at 9-10; Resp. at 18.) Specifically, Horizon House lists six primary witnesses: Bob 20 Anderson, Horizon House’s Chief Executive Officer who resides in Seattle; Carl Siver, 21 Horizon House’s CFO who also resides in Seattle; Katherine Kirchoff, Cain Brothers’ 22 Managing Director who is in Los Angeles; Chris Everett, Cain Brothers’ Senior Vice ORDER DENYING MOTION - 8 1 President who is in New York; Scott Smith, Cain Brothers’ Managing Director who is a 2 Florida resident who periodically works in New York; and Irene Fischer, a Seattle-based 3 attorney who assisted Horizon House with its financial transactions. (Resp. at 18.) 4 Beyond the witnesses cited by Horizon House, Cain Brothers lists nine additional 5 non-party witnesses located in New York. 3 The court, however, finds the value of these 6 witnesses to be minimal. Of the nine witnesses listed by Cain Brothers, eight are 7 allegedly connected to the present case solely through their involvement with the dispute 8 between Horizon House and LBSF. Furthermore, Cain Brothers states that seven of the 9 nine witnesses will discusses the same topics—the reasonableness of any settlement 10 between Horizon House and LBSF and the adequacy of Horizon House’s defense. (Mot. 11 at 9-10.) Accordingly, it is reasonable to conclude that some of this testimony will be 12 duplicative and unnecessary. Thus, it appears the actual number of witnesses needing to 13 travel between forums is more balanced than Cain Brothers asserts. Therefore, a transfer 14 of venue to New York would largely shift costs, rather than reduce them. 15 Finally, although Cain Brothers makes the legitimate argument that Horizon 16 House’s ongoing dispute with LBSF in New York may lessen the financial burden put on 17 Horizon House by litigating this case in New York, it does not appear that such a 18 19 3 Cain Brothers lists the following non-party witnesses: Denis Forster (Horizon House’s counsel of record in its dispute with LBSF and the present case), Courtney Jenkins (LBSF), Seth 20 Konheim (LBSF), Cherry Liang (LBSF), Bill Lee (LBSF), Locke R. McMurry (LBSF’s contact 21 in relation to the dispute with Horizon House), Lawrence Brandman (LBSF’s contact in relation to the dispute with Horizon House), Richard Levine (counsel for LBSF in its dispute with Horizon House), and Sujan Trivedi (counsel for LBSF in its dispute with Horizon House). (Mot. 22 at 9-10.) ORDER DENYING MOTION - 9 1 reduction would be significant. There is no assurance that the mediation, or potential 2 litigation, between Horizon House and LBSF will coincide temporally with the present 3 case. Furthermore, Cain Brothers has not asserted that that the two cases are likely to be 4 consolidated. The court thus finds that Horizon House’s dispute with LBSF will not 5 significantly reduce the costs of litigating this case in New York. Even assuming this 6 factor did weigh in favor of transfer, it does not, on balance, overcome all of the other 7 factors that weigh against transfer. 8 7. The Availability of Compulsory Process to Compel Attendance of Unwilling Witnesses 9 In the present case, there are a number of non-party witnesses who reside in 10 several locations across the country and outside of the subpoena power of either the 11 Southern District of New York or the Western District of Washington. (Mot. at 9-10; 12 Resp. at 18.) Because there is no one district that commands subpoena power over the 13 vast majority of non-party witnesses, the court finds that transferring the case to New 14 York would not increase the number of witnesses in attendance. 15 8. The Ease of Access to Sources of Proof 16 Transferring venue in this case would not significantly alter the parties’ access to 17 evidence. Beyond the availability of witnesses, both parties focus on the location of 18 pertinent documents. Cain Brothers stresses that a significant number of documents 19 relating to the dispute between LBSF and Horizon House are located in New York. 20 (Mot. at 11-12.) As Cain Brothers admits, however, the location of documents is not 21 dispositive because documents “can be transported with relative ease.” (Reply (Dkt. # 22 ORDER DENYING MOTION - 10 1 27) at 13.) Furthermore, Horizon House highlights the fact that many relevant documents 2 are located in Washington and California. (Resp. at 22.) Thus, the court finds that the 3 location of documents does not favor a transfer of venue. 4 9. The Public Policy of the Forum State 5 Public policy considerations favor litigating this case in Washington. Forum states 6 have an interest in providing redress for their injured residents. See Gordy v. Daily News, 7 L.P., 95 F.3d 829, 836 (9th Cir. 1996) (noting that “California maintains a strong interest 8 in providing an effective means of redress for its residents tortiously injured” in a case 9 determining personal jurisdiction). Furthermore, the median length of time to trial is 10 over 12 months shorter in this district as compared to the Southern District of New York. 11 (Resp. at 24.) Together, these facts weigh in favor of litigating this case in Washington. 12 10. Weighing the Jones Factors 13 The court, having considered all the factors promulgated by the Jones court, finds 14 that transfer of venue is not warranted. The location where the agreement was negotiated 15 and executed, Horizon House’s choice of forum, the respective parties’ contacts with the 16 chosen forum, the contacts relating to Horizon House’s cause of action, and the public 17 policy of the forum state all weigh against transferring venue. Only one factor—the 18 differences in costs in of litigation in the two forums—arguably weighs in favor of 19 transfer. That factor alone, however, does not outweigh the others. Accordingly, the 20 Western District of Washington is the proper forum for this case. 21 22 A. CONCLUSION For all of the reasons stated above, the court DENIES Defendant’s motion to ORDER DENYING MOTION - 11 1 transfer venue (Dkt. # 20). 2 Dated this 7th day of February, 2012. 3 A 4 5 JAMES L. ROBART United States District Judge 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 ORDER DENYING MOTION - 12
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