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Lagerstrom v. Enterprise Bank & Trust

United States District Court, D. Kansas

March 18, 2014

JULIANNE LAGERSTROM, et al., Plaintiff,
v.
ENTERPRISE BANK & TRUST, Defendant.

MEMORANDUM AND ORDER

J. THOMAS MARTEN, District Judge.

Plaintiffs Clare Blasi, Gloria Garrett and Julianne Lagerstrom filed suit alleging Enterprise Bank & Trust violated the Equal Credit Opportunity Act by requiring each of the plaintiffs to sign a guaranty on loans sought by a third party. The matter is now before the court on defendant Enterprise's Amended Motion to Dismiss or Transfer (Dkt. 10). After reviewing the parties' briefs on the motion, the court is prepared to rule. The court grants the motion to transfer for the reasons stated below. As a result, the court does not address the merits of Enterprise's motion to dismiss, which would be more appropriately addressed by the transferee court.

I. Background

Table Rock Canyon, LLC is a limited liability company organized and existing under the laws of Missouri. Frontline Development, LLC is another Missouri limited liability company that is a member and sole manager of Table Rock Canyon. Nicholas Blasi, Gordon Garrett and Cory Lagerstrom were members of Frontline Development at all times relevant to this suit. Clare Blasi, Gloria Garrett and Julianne Lagerstrom are the respective wives of Nicholas Blasi, Gordon Garrett and Cory Lagerstrom. They are not members or managers of Table Rock Canyon or Frontline Development, and they do not hold any legal interest in either company. Enterprise Bank & Trust is a trust corporation and chartered bank organized and existing under Missouri law, with its headquarters in Missouri and an office location in Overland Park, Kansas.

On July 30, 2007, Table Rock Canyon entered into a loan agreement with Enterprise. As a condition of issuing the loan to Table Rock Canyon, Enterprise required Clare Blasi, Gloria Garrett and Julianne Lagerstrom to sign guaranties and multiple periodic consents regarding the enforceability of their guaranties. The plaintiffs claim that by requiring them to execute the guaranties and consents, Enterprise discriminated against them on the basis of marital status in violation of the Equal Credit Opportunity Act, 15 U.S.C. § 1691(a) and Regulation B, 12 C.F.R. § 202.7.

Enterprise now moves the court to transfer the case to the Western District of Missouri, citing the forum-selection provision contained in each of the guaranties signed by the plaintiffs.

II. Legal Standard - Motion to Transfer

"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) (2012). A forum-selection clause can be enforced by a motion to transfer under 29 U.S.C. § 1404(a). Atl. Marine Constr. Co. v. U.S. Dist. Ct. for W. Dist. of Tex., 134 S.Ct. 568, 579 (2013). The decision whether to grant a motion to transfer is within the sound discretion of the district court. See Scheidt v. Klein, 956 F.2d 963, 965 (10th Cir. 1992).

"In the typical case not involving a forum-selection clause, a district court considering a § 1404(a) motion (or a forum non conveniens motion) must evaluate both the convenience of the parties and various public-interest considerations." Atl. Marine Constr. Co., 134 S.Ct. at 581. Ordinarily, the district court would weigh the relevant factors and decide whether, on balance, a transfer would serve "the convenience of parties and witnesses" and otherwise promote "the interest of justice." Id. (citing § 1404(a)). The calculus changes, however, when the parties' contract contains a valid forum-selection clause, which "represents the parties' agreement as to the most proper forum." Id. (quoting Stewart Organization, Inc. v. Ricoh Corp., 487 U.S. 22, 31 (1988)). "[A] valid forum-selection clause should be given controlling weight in all but the most exceptional cases." Id. (internal citation omitted).

"The presence of a valid forum-selection clause requires district courts to adjust their usual § 1404(a) analysis in three ways." Id. "First, the plaintiff's choice of forum merits no weight." Id. "Rather, as the party defying the forum-selection clause, the plaintiff bears the burden of establishing that transfer to the forum for which the parties bargained is unwarranted." Id. "Second, a court evaluating a defendant's § 1404(a) motion to transfer based on a forum-selection clause should not consider arguments about the parties' private interests." Id. at 582. "When parties agree to a forum-selection clause, they waive the right to challenge the preselected forum as inconvenient or less convenient for themselves or their witnesses, or for their pursuit of the litigation." Id. "A court accordingly must deem the private-interest factors to weigh entirely in favor of the preselected forum." Id. "As a consequence, a district court may consider arguments about public-interest factors only." Id. "Because those factors will rarely defeat a transfer motion, the practical result is that forum-selection clauses should control except in unusual cases." Id. "Third, when a party bound by a forum-selection clause flouts its contractual obligation and files suit in a different forum, a § 1404(a) transfer of venue will not carry with it the original venue's choice-of-law rules-a factor that in some circumstances may affect public-interest considerations." Id. In other words, there is no potential conflict of laws issue for the court to consider because the transferee court will apply its own laws. See id. at 582-83.

"When parties have contracted in advance to litigate disputes in a particular forum, courts should not unnecessarily disrupt the parties' settled expectations." Id. at 583. "In all but the most unusual cases, therefore, the interest of justice' is served by holding parties to their bargain." Id. "[T]he plaintiff must bear the burden of showing why the court should not transfer the case to the forum to which the parties agreed." Id. at 582.

III. Analysis

Enterprise argues that this case should be transferred to the Western District of Missouri because the guaranties signed by the plaintiffs limited their choice of forum to the state and federal courts in Jackson County, Missouri. The guaranties contain the following forum consent clause:

14. Consent to Forum. As part of the consideration for new value this day received, each Guarantor consents to the jurisdiction of any state and federal court located within Jackson County, Missouri and waives personal service of any and all process upon such Guarantor and consents that all such service of process be made by certified or registered mail directed to such Guarantor at the last known address of such Guarantor as reflected in the Lender's records, and service so made shall be deemed to be complete upon delivery thereto. Each Guarantor waives any objection to jurisdiction and venue in any action instituted against such Guarantor as provided herein and agrees not to assert any defense based on lack of jurisdiction or venue. Each Guarantor further agrees not to assert against the Lender (except by way of a defense or counterclaim in a proceeding initiated by the Lender) any claim or other assertion of liability with respect to this Guaranty, the Obligations, any of the Transaction Documents, the Lender's actions or inactions in respect of any of the foregoing or otherwise in any jurisdiction other than the foregoing jurisdictions. Nothing in this Section shall affect the ...

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